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  • Category: Tax Planning

    How is income from derivatives and intra-day is taxed for income tax purpose?

    Searching for more information about income tax and derivatives? Find responses from experts on this page.

    I need to do my tax return for financial year 2015-16. How should I treat my income from options derivatives and intra-day trading for income tax purpose? Is there any expenses that I can take as a deduction? What all documents do I need to submit along with my tax return and if there is any tax due how will I make the tax due payment?
    Experts: do respond.
  • #136874
    Gains made within 12 months of the sale of a stock are short-term capital gains, which are taxed at 15 per cent for investors. For the traders, short-term gains are taxed the same way as long-term gains. In case of a loss, traders can set off/carry forward both short-term and long-term capital losses. In the case of investors, only the short-term capital loss can be carried forward and set off. There is an eight year time limit for setting off capital loss. If you have made profit through day trading, the profit (or loss) from such intra-day trade is treated as speculative activity. So if you make a profit, it will be added to your income and taxed as per your tax slab. A speculative loss can be taken forward for setting off, but within the next four years against speculative income only.

    If you are in Future & Options (F&O) market, you are considered a trader. So profits from trading in the F&O market will be considered business income. This will be added to your income under other heads and the total will be taxed at the applicable income tax slab rate.

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  • #136900
    Any gains from mutual fund, shares and few other demat investment are termed as short term gains. So any dividend from shares, selling shares comes under taxation. On that 15% of the taxes are applied. And this is usually withdrawn by the demat company and you have to get the deduction during taxation for that. If the tax applied is not withdrawn then you have to declare that yourself and managed. This needs to be done with the consultation of the tax consultant with your demat details for the year.

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