Day Trading - Speculative income ??

#1
Hi,

Does any body know if day trading is treated as speculation when we file a return ? I know that upto last financial year trading in derivatives was considered speculative income and was treated as such. This year that is not so. But what about day trading in stocks and day trading in derivatives ? What is the rate of taxation that it attracts ? Can it be treated as trading activity and profit/loss clubbed with other income or should it be treated as speculation and profit or loss treated accordingly ? I am asking this because my auditor says that speculative losses cannot be adjusted with profit/loss from other business and they can only be carried forward upto 7 years.

I request other members of this forum who are knowledgeable in such matters to help out.

Regards,
Kalpana.
 
#2
Hello Snowy..
How do u do ? I tell u what I know... Yeah Day trading is treated as Speculation trading on file return.. this year it has been changed from last year.. its called "Short term Capitalation Gain".. they charge 10 % of your profit as Tax.. there is no tax for losses.. you will be taxed only if your income exceeds above 50,000.00 per annum.. you cannt adjust profit or loss from other businesses.. and also cannot be carried forward for 7 years... now it is only one year.. I mean till the end of Current Year..
Day Trading in Stocks and also Derivatives are treated as Speculation Trading.. This is what I know.. If you anything else wanna know, please feel free to ask.. I tell you what I know !
Happy Trading !

With Regards,
--- Jin ---
 
Last edited:

alokdaga

Active Member
#3
snowy said:
Hi,

Does any body know if day trading is treated as speculation when we file a return ? I know that upto last financial year trading in derivatives was considered speculative income and was treated as such. This year that is not so. But what about day trading in stocks and day trading in derivatives ? What is the rate of taxation that it attracts ? Can it be treated as trading activity and profit/loss clubbed with other income or should it be treated as speculation and profit or loss treated accordingly ? I am asking this because my auditor says that speculative losses cannot be adjusted with profit/loss from other business and they can only be carried forward upto 7 years.

I request other members of this forum who are knowledgeable in such matters to help out.

Regards,
Kalpana.
Hi Kalpanaji

From this year onwards derivative income will be treated as business income and will be charged as per the tax slab you land in. Any business losses can be adjusted against derivative income.

I have confirmed this from many many many lawyers as I was under the impression that derivative income can be treated as short term income and just to clarify this I contacted so many persons and came to the above conclusion.

Regards

Alok
 
#4
Hi Alok,
If u kindly clarify more ---regarding the taxation matters in intraday Derivatives----I will be obliged--
" Any business losses can be adjusted against derivative income."---Is it really true?
Hope to get a response from u as well as any other knowledgables---
Regards,
joy_mitali
 

alokdaga

Active Member
#5
Jin said:
Hello Snowy..
How do u do ? I tell u what I know... Yeah Day trading is treated as Speculation trading on file return.. this year it has been changed from last year.. its called "Short term Capitalation Gain".. they charge 10 % of your profit as Tax.. there is no tax for losses.. you will be taxed only if your income exceeds above 50,000.00 per annum.. you cannt adjust profit or loss from other businesses.. and also cannot be carried forward for 7 years... now it is only one year.. I mean till the end of Current Year..
Day Trading in Stocks and also Derivatives are treated as Speculation Trading.. This is what I know.. If you anything else wanna know, please feel free to ask.. I tell you what I know !
Happy Trading !

With Regards,
--- Jin ---
Hi Jin

I feel your information is slightly incorrect. Short Term Capital Gain is applicable for deliveries only. Day trading is still considered as speculative income and attracts your applicable tax slab..

Regards

Alok
 

alokdaga

Active Member
#6
joy_mitali said:
Hi Alok,
If u kindly clarify more ---regarding the taxation matters in intraday Derivatives----I will be obliged--
" Any business losses can be adjusted against derivative income."---Is it really true?
Hope to get a response from u as well as any other knowledgables---
Regards,
joy_mitali
Hi Joy,

Derivative income is trated now as a business income so you can treat it just as any business income entry.

Hope that helps.

Regards

Alok
 

pkjha30

Well-Known Member
#7
Hi Joy

Short term capital gains(10%) and long term capital gains(0%) are for those who invest in stocks/mutual funds and are delivery based. No expediture is allowed as deduction except brokerages, dp charges.short term capital loss can be set off against short term capital gains(STCG) and long term loss against long term gain(LTCG).Indexation is allowed for LTCG but then certain charges are disallowed.you can carry forward you loss to next three year (please confirm this one as I have not yet done this) and set off against any STCG.You have to keep and enclose all your returns and statements and file again as documents for this purpose.

if you trade in stocks including day trading, derivatives and may be delivery based, your income will be treated as business income and taxed accordingly. You will be entitled to deduct your business expenses before you calculate profit and loss.

you might treat some of your purchases of stocks as investment and others as business. But it is for you to establish your bonafide before the assessing officer. Further you may want to treat one year as business and another year as investment. This is not permitted and you may have to with your status unless you are able to show material evidence for changeover. Obviously frequent changeover will demolish your own arguments.

Both have its advantages and you have to decide.

Examples of speculative income would be lottery in any form, KBC income, TV programmes giving prizesetc. Frequent purchase and sell of stocks etc and to show them as investment is also treated as speculation but frequency is a subjective decision.

Any kind of speculative income is taxed at the rate of 30% +surcharges etc. irrespective of income group.

Regards
Pankaj
 

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