Tax treatment for ITM Cash secured put and Covered Call

Hello Sir,

Can any expert explain the tax treatment of cash secured put and covered call stock options where we take or give delivery of stocks.

In nomal cases ,

Turnover is calculated as = Total Premium received + ( Difference of Selling and Buying Price)

How will turnover be calculated for tax , if we take delivery of stocks or give delivery of stocks at expiry.


If you’re taking or giving delivery of stocks as a result of physical settlement, the turnover will include the entire transaction value. Also, in this case,

  1. If you’re holding shares and give delivery - Purchase price of the shares can also be included in the turnover since you’re holding the shares as “stock-in-trade for a business transaction” as opposed to an “investment”. You may claim you’ve converted your investments to stock-in-trade. However, if your tax returns are scrunised, the Assessing Officer may consider all your shares as stock-in-trade and disallow the benefit of preferential STCG & LTCG.
  2. If you’re taking delivery - Sale price of the shares can also be included in the turnover. Same treatment and reasons as above.

The treatments depend on best judgment. It would always be a good idea to consult your CA while filing returns.

Hello, your reply is not clear. For eg- If we include the purchase value of stocks in turnover , Then first I will have to pay 6% profit on total turnover and then also have to pay STCG on sale of stocks as my holding is less than 1 year.

I think, in covered call ,

a. turnover will be - Premium earned Plus (Difference of Sell and Buy, where buy value will be Zero)
b. STCG or LTCG on sale of stocks

In cash secured put

a. turnover will be - Premium earned Plus (Difference of Sell and Buy, where buy value will be Zero)
b. Stocks purchased will be credited to demat account

@Quicko Please tell if this is correct approach

Hello Sir, Can any expert please reply to my query. What is the correct method to calculate turnover for Cash secured put or cover call @Quicko @s

Hey Deep,

Equity Delivery Trading - If treated as Capital Gains Income
Turnover is not required to be calculated.
Tax Rate is 15% for STCG and 10% in excess of 1 lac for LTCG

Equity Delivery Trading - If treated as Business Income
Turnover = Total Sales Value
Tax Rate = Income Tax Slab Rates

F&O Trading
Turnover = Absolute Profit for Futures Trading & Absolute Profit plus premium on sale of options for Options Trading
Tax Rate = Income Tax Slab Rates

Hope this helps :slight_smile:

Hello Sir,
Can you please answer specific to this condition. For eg- I sold Cash secured Put and got premium of Rs 6000 and at expiry took delivery of stock of 6 lakh total value. What is my profit and total F&O turnover in this case ?

Hey Deep,
The turnover would be sum of absolute profit and premium on sale of option. The realized profit is the difference in sale value and buy value.

Hello Sir,

can you please explain with calculation.

I have received premium of 6000 only by selling cash secured put option and my Put went ITM and I have to take physical delivery of stock whose total value is 6 Lakh (2000 x 300 stocks)

Now, Can you please tell if Turnover in above scenario for option will be only 12000 as ( I received 6000 by selling put and did not buy back the stock option and took physical delivery so Buy value is Zero)

Please tell if above is correct or I need to add cost of stock purchase as Buy value and then turnover will be 6,06,000

Hello Sir, Can any knowledgeable expert can tell which of the above turnover calculation is correct in the scenario I mentioned above , @Quicko please advise