Can F&O considered as short term capital gain

#1

I m salaried person with 4lac as income.
I incurred NSE Futures loss of 3.4lac this year.
I want to carry forward it.

My CA filled ITR 2 for that where he showed loss as capital gain loss.
And also he shows
Cost of acquisition :=17crore as futures selling price.
Is it correct. ??
As 17crore selling is due to future i only traded with 5lac cash.

#2

F & O trading wont come under capital gain if we can plain reading of Income Tax circular for Investment and Trader. The prerequisite for investment is intent to earn dividend out of Investment than profit.

#3

Trading in Futures and Options is considered as a speculative business. Hence, it has to be shown under the head Income from business and profession. It has to be carried forward as business loss.

#4

yes but my CA submitted it as Short Term Capital Gain to avoid audit

#5

It is non-speculative bro.

1 Like
#6

@surajs the issue now is u have shown 17 crores as acquisition turnover

Remember if u go for short term cg then entire single leg trade value of buy becomes ur acquisition cost and similarly selling side as selling cost

F and O must go as business loss itr3. Only equity itr2

#7

Hi Surajs,

Any income or loss from F&O Trading is considered under the head Business & Profession Income. In simple terms, if any activity of trading is done with a view to earn profit should be considered under the head “Business & Profession”. And any activity of trading is done with a view to build investment over the years should be considered under the head “Capital Gain”.

In your case, you need to file ITR-3 and show losses from F&O as business losses. Since your total income is more than 2,50,000 (Basic Exemption Limit) and you have losses tax audit will be applicable. For more information you can reach out to me at hiral.vakil@quicko.com.

#8

then normal IT Slab ?, if we want to do as business like separate office for day trade, can deduct from profit? section 44AA?