When option contract (ITM call short) is exercised on Expiry day, we need to Give physical delivery of stocks from our Demat Holding to broker for physical settlement. Is giving physical delivery of stocks consider as Capital Gain/loss or F&O income?
As Giving physical delivery from Demat Holding is considered as “Sale of stocks”.
So, is it needed to report in ITR as Capital income or F&O income ?
Physical settlement of derivative contracts will be treated as an equity transaction as per this source and this one
For taxation purposes, The treatment will be the same as how you treat equity-related income in general (Business income or capital gains)
Requesting @Quicko to throw more light on this
thank you for your repsonse sir. article is helpful . Does Profit/Loss from giving physical delivery reflect in zerodha Tax P&L Report under Equity category or F&O category?
But in AIS, the reported price of physical settled equity shares is closing balance instead of strike price of ITM options on which the physical settlement happens. This practice should be stopped.