Mihir (Wealth Manager) (5293 Points)
03 January 2012Can anybody explain the taxability of gold/silver future trading (with delivery and without delivery) ?
I think it will be a speculative business if delivery not taken.
Can someone adjust one's short term loss from speculative business in gold/silver future trading with short term gains ?
Thanks
Murli Manohar Agarwal
(Self Employed)
(36 Points)
Replied 04 January 2012
@ Mihir : Trading in future of Gold/Silver will constitute speculative business whether u take delivery or not. If u do not take delivery then its surely speculative nature but if u take delivery then also it will amount to speculation business (provided this constitute your business and not for investment purpose) since in future trading your intension is not for investment.
Again, any loss from speculation business can be set off only through profit from speculation business and not from any other incomes. Now replying ur second query, If ur short term gain is from speculation business then ur loss from speculative business(trading in future of Gold/Silver) can be set off from such gain or profit.
Dhruv Gaglani
(Learning)
(278 Points)
Replied 05 January 2012
‘speculative transaction’ means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips
Thus only if delivery is not taken, the transaction will amount ot speculative business otherwise it will be non speculative business.
As laid down in Davenport & Co., (P.) Ltd. v. CIT [1975] 100 ITR 715 (SC)
“A transaction which is otherwise speculative would not be a speculative transaction within the meaning of the definition if actual delivery of the commodity or the scrips has taken place ; on the other hand, a transaction which is not otherwise speculative in nature may yet be speculative according to the definition if there is no actual delivery of the commodity or the scrips. The definition does not invalidate speculative transactions which are otherwise legal but gives a special meaning to that expression for purposes of income-tax only”
As to your second query, as the transactions are considered as business transactions (irrespective whether they are speculative or non speculative), there is no concept of short term or long term gains / loss.
Loss from speculative business can only be set off against profit from speculative business. However loss from non-speculative business can be set off against profit from both speculative as well as non-speculative business.
Hope the above resolves your query.
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