Auction and physical settlement

[Nsingh]

Dear @nithin
In case of in the money options. And the same is not square of till the expiry. Then there will be physical settlement.
BUT THERE IS SHORT DELIVERY. And in the auction no seller available.
Then the above is settled in cash with penalty of 20%.
Now I want to know whether profits/losses is treated as business income or capital gain.
Thanks.

[nithin]

@Nsingh

Now I want to know whether profits/losses is treated as business income or capital gain.
Thanks.

I think the best stance to take is that it is a business income. You can potentially take a stance of showing it as capital gains, but it is debatable.

[Nsingh]

Dear @nithin
In zerodha, whether the same is included in gross profit and turnover in tax p/l report ?
Thanks.

@nithin

@Nsingh

Now I want to know whether profits/losses is treated as business income or capital gain.

Thanks.

I think the best stance to take is that it is a business income. You can potentially take a stance of showing it as capital gains, but it is debatable

[Nakul]

@Nsingh

Dear @nithin
In zerodha, whether the same is included in gross profit and turnover in tax p/l report ?
Thanks.

Yes, in the case of short delivery and cash settlement of the trade, the profit will show up as intraday profit in the Equity Tax P&L. Similarly, the turnover (absolute value of profits and losses) will also show up for the intraday trade.