Any profits you make from these transactions will be classed as speculative activity. Section 43 5 of the Income Tax Act, states that any such profits will be added to your other income. This means it will be taxed in line with your total income slab.

Stock Market

So, this is a progressive tax and the total value of your obligations will depend on your total profits at the end of the tax year. This category concerns the futures and options trading tax rate in India. Both are viewed differently to other instruments. Any income from trading either on recognised exchanges will be considered non-speculative business income.

This means your profits will be added to your total income and you will pay in accordance with your tax slab. However, as this income is considered business income, you can offset it against business expenses you have incurred. That means advisors fees, internet bills, software charges and more can all be offset.

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So, many view option trading tax in India as rather appealing. However, what are the benefits and drawbacks of that decision? Your initial task will be to determine which of the above categories best describes your trading activities.

Pros & Cons Of Business Income Tax

If you are unsure and require further clarification, you should seek professional tax advice. If you are an active day trader and your profits fall under the business income tax rules, you will have to pay in accordance with your tax slab. If your total earnings are above the minimum income slab you will be obliged to pay something. Lastly, speculative losses can only be used to offset against speculative business income, and not against Non-Speculative Business Income.

Note that this can be carried forward for up to 4 years. This category belongs to business operations that used options and futures for the purpose of hedging their exposure to risks. They could be delivery-based equity trades, equity futures and options, and currency futures and options. This category of income is subject to tax and will be added to your total income.

Your actual tax payable will depend on which tax stab it reaches. The difference between Speculative Business Income and Non-Speculative is that the losses from the former can be used to offset: Speculative Business Income, business expenses, business income except salary — and it can be carried forward for up to 8 years.

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Though it was at the peak Tax season, they are able to run the right horses in-time to get what is otherwise a complex tax filing. Jaya Prakash Bankok Restaurant Chain. Had a great experience in filing my tax with EZTax.

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