TAXES vs Trading of Futures and Options

Head of Income

Income from futures and options will be considered as Non-speculative business income and taxed under the head "Income from business/profession".

Calculation of turnover:

Turnover for this purpose shall comprise of

1) Profit from sale of derivates

2) Loss from sale of derivatives

3) Premium received while writing an option

Taxation of profits

Non-speculative business income shall be taxed at normal rates applicable to the assessee.

Loss from trading in F&O

Loss from F&O trading during the year can be set-off against any other head of income except Income from salary.

Ex: Loss from F&O can be set-off against Income from house property/Income from other business/profession/ Income from other sources earned during the year.

Carry forward of Loss

Loss remaining after set-off during the year can be carried forward to next 8 A.Ys and can be set-off from Income from other heads except salary in future years.

To be eligible to carry forward the loss, income tax return claiming the loss shall be filed within the due date applicable to assessee.

Tax Audit

It is mandatory to get the Accounts audited by a Chartered Accountant in practice u/s 44AB in case if turnover from F&O trading is more than Rs.10 crores.

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