My CA told me that there was a Supreme court judgement that said that F&O can either be regarded as business income or Capital gains.
I only buy yearly puts as a hedge against my cash portfolio so the transactions are less than 10 in a year. I was thinking if I can show it as loss under capital gains.
Is there anyone who is filling F&O as capital gains?
Hello, @Harshajyoti_Das
Gains from futures & options are treated as business income and not capital gains. It has been specifically excluded from speculative business u/s. 43(5) of Income Tax Act, therefore since these are not considered as speculative business, income from such transactions will be considered as normal business income and loss from such transactions will be considered as normal business loss.
If you can cite the supreme court judgement, we will look into it and revert back to you.
Hope this helps!
Thank you for your response @Quicko . I have asked for that reference of that judgement from my CA. Till now I haven’t heard anything back from them.
I am doing F&O in my individual account. I also have previously purchased shares and mutual funds. My CA has warned me that if I persist in doing F&O in my account there is a risk that the IT officer may judge me as a trader and deny the benefit’s of capital gains tax in my long term investments.
How far is it correct? Any experience from my fellow traders?
Gains and losses from delivery of shares will still come under capital gains.
Shares comes within the definition of capital asset as per the provisions of Income tax act.
My CA has warned me about this with regards to another of his client who had to endure a 10 year fight in the legal system to prove that he was not a trader. In this particular case it was the wife’s account which was flagged as a trader. The name of the case is available on the web. Just search for Hiren Dand Vs ITO. The issue came up for FY 2008-2009. The client fought it systematically. He lost his appeal with the CIT (Commissioner of Income Tax). He appealed against this order in the tribunal at Mumbai. He won this in 2015. The IT department appealed against this order in the Supreme Court. He won again in the SC in 2018. The matter was over a scrip which he had held for 12 months. Although he won he had to undergo the tortuous legal system for 10 years. The scenario according to my CA has still not changed.
Hence my query.
If you go through all the case laws you will never be able to do anything in your life. If you are just walking on the road also, somebody can file a case against you saying you threatened to kill them.
U have income tax provisions and as you mentioned even a supreme Court ruling on your side. So you decide.
That makes sense, Thanks.
I stopped trading when I came to know that I can make the same amount of money investing with the same amount of risk.