I have an open options position at the end of the year where I have sold a 20500 ce of nifty for apr 2025 , how will the premium of 1.5 lakh received be taxed at the end of fy 31/3/25 .
People say that whole 1.5 lakh will be subject to tax and next year when you square the whole premium will be considered loss @Quicko
This is a little urgent if anyone can please reply
If you follow the accrual method, the ₹1.5 lakh premium will be taxed this year, and any loss next year will be adjusted. If you follow the realized method, there’s no tax this year—you’ll be taxed only when you close the trade. Check with your CA to avoid unnecessary taxation.
@Quicko Can you confirm?
This.
Hello @niftymonk @Rushang_Mehta
In our opinion, any premium received will be included to calculate profit or loss from Option transaction and will be taxed only when you square off the transaction.
Thus, there will be no tax liability in case of a open position as on 31st March.
Thank you.
Current asset or current liability. As the case may be.
Shouldn’t it be stock in trade as F&O is not a capital asset?
No. If it was equity bought for trading purpose, it can be stock in trade.
If it’s fno, they are mere contracts. Basically right to buy or sell. So it can be unrealised gains or loss under current assets or current liabilities.
Anyways it won’t make any difference to tax liability and it hardly matters unless it is some 10cr plus turnover. If it’s above 10cr, then it’s anyways audit case.
So keep it simple.
Thanks @Jason_Castelino for your reply.
Actually my question is f&o have two components, one is options and second one is futures, in options there is no mark to market settlement but in case of futures, there is mark to market settlement, and you know if you have unrealised loss at the year end, let’s say ₹ 10 lacs, this means ₹ 10 lacs had gone from our trading account to unknown country party account. I just want to know whether this amount shown in balance sheet, specially for those who file ‘itr 4 sugam’ in presumptive basis (but disclose complete details of balance sheet in ITR 4).
Not really. Only some details in balance sheet like cash in hand, sundry debtors are mandatory in itr4 and the rest are optional - the balance sheet doesn’t have to balance and the system will still accept.
Not required. It’s indirectly already reduced from your balance with broker.
Thanks @Jason_Castelino ,
And what about broker balance, where we have to show, debtors or other assets in ITR 4.
Moreover, if there is unrealised gain in futures (and same is withdrawn), then broker balance turn into negative balance, then where we have to show, creditors or other liabilities in ITR 4.
Hey @Nsingh,
If the broker balance is positive, you can show it under Other Current Assets in ITR-4. If the broker balance is negative, you can show it under Other Current Liabilities.
Same.