@ Nithin sir in case of F&O, the closing price for P&L purposes for open positions as on 31st March should be closing price as on 31st March or rollover price if I had done rollover of the open position from earlier month contract?
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In case of F&O the closing price for P/L shall be as per the value of contract as on 31st March i.e. the closing price as on 31st March.
Hope this clarifies!
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@Quicko @nithin @Meher_Smaran Hi. Lot of people have told me that open positions as on 31st March (April contract) do not have to be counted for profit / loss as there is notional gain / loss. And mark to mark is just from RMS purposes and not actual gain / loss. Only positions which were closed till 31st March have to be considered for tax p&l and not the notional profit for open positions based on 31st March closing price. Can you pls clarify as I am getting contrary views.
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@Piyush_A
Proper terminology is realized and unrealized gains/losses.
So net of all realized gains/losses will be considered as of 31st March that results in single value of Profit or loss.
Realized positions are for contract positions that were closed(exited).
Position calculation in Tax PnL is using FIFO method. There is no doubt even if same contract is traded multiple times.
source How is buy average calculated for F&O trades? (zerodha.com)
This means that âchronologicallyâ all the last opened positions that are carried(not exited) will remain unrealized for the FY in context.
So gain / loss on unrealised positions as per your terminology do not have to be considered for P&L calculation as per 31st March closing price? @Quicko This is different from what you said? Kindly once confirm as we can see a contrary view here itself for open positions as on 31st March
It is not my terminology. It is Accounting termâŚ
Secondly, you dont need âLastâ closing prices to actually calculate PnL bcos all positions are already closed.
The price is needed in the accounts part (trading a/c, balance sheet etc) of closing balance, balance c/f
Bcos you will have xyz amount with Broker as cash or margin etc and to balance it with unrealized gain/loss so that your net cash will tally.
where and what did Quicko say?
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Sir, I am trying to understand for open FNO positions and not closed positions. Quicko team said above that for open FNO positions as on 31st March (April contract), you have to consider closing price of that contract as on 31st march and accordingly calculate and report the P&L for that FY. I am quoting what they said above: In case of F&O the closing price for P/L shall be as per the value of contract as on 31st March i.e. the closing price as on 31st March. Hence the confusion.
Example:
I have 1 lot of HDFCApril2023 contract which I purchased on 25 March at say 1600 Rs and is open on 31st March 2023. This contract closing price as on 31st March is say 1630. So for Income tax P&L purposes for FY2022-23, should I consider this 30 Rs profit or just ignore this as it was not realised gain but unrealised gain (as I didnât close the position on 31 March).
Some people say you can ignore the 30 in the above example as its not realised, some people say I have to add the 30 in the P&L for FY2022-23.
Any open position is unrealised gain/loss so it is not calculated as part of the tax pnl in current FY.
Let Quicko clarify but you may have misunderstood the purpose of the closing price. If you download Z tax pnl from console, you can clearly see, how it is computing.
@Quicko I tried downloading the Quicko tax p&l and it only considers the realised gains and not gains on open positions. Can you please clarify as this is different from what you stated in this forum above
Do not consider unrealised gains.
Hi @Piyush_A
For calculating Profit & Loss for Income Tax purpose, we need to take only realized gains into consideration. Thus, in your example of HDFC, you can ignore unrealized gains of INR 30.
Earlier, we had mentioned that you need to take closing value as on 31st March to calculate the unrealized profits as on 31st March. It is not to be considered for calculating the tax P/L for ITR.
And do what with this information? Just curious to know.
In case, you consider your trading as business income, then to calculate the value of closing stock to be mentioned in balance sheet, closing value as on 31st March is taken into consideration.
How is it stock? A contract doesnât satisfy the definition of inventory.
You can just show the margin blocked for open positions under current assets along with cash balance with the broker.
Can you give reference to any section of the Act which says we should consider M2M on the open positions? At least ICAI guidelines?
Trading income from F&O has to be business income only right? And in the balance sheet just balance with the broker needs to be shown as on 31st March, so this value of F&O open positions (unrealised positions) has then no value then for income tax purposes
Hi @Jason_Castelino,
Apologies for responding late.
ICAI issues guidelines in respect of certain transaction to be accounted in the books. As per the ICAI guidelines, 2021, they have suggested to report the Open derivative transaction as on 31st march at fair value and account the difference in profit and loss. You can find the same on under Para 11 Point (i) on Page No. 14 (Page 16) from the below reference link of Guidelines issued by ICAI.
Hope this helps!
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Thank you for taking time and clarifying. Finally I understood what you were trying to say.
So when we prepare the balance sheet we need to show it as âunrealised gain from open FNO positionsâ under âcurrent assetsâ. Since we follow double entry this will also have impact on the profits in PL statement. This is contrary to what you have mentioned earlier.
The only way I can think of doing this is in ITR
Profit as per books of accounts
Less: unrealised gain on FNO.
Well I think we are just complicating this. Thanks anyways. 
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