tax on derivatives ?

[jntrade]

Thanks Ashish!
Please clarify with a case study.
I am currently doing four types of trading,1.Futures 2.Options 3.Delivery
4.Margin(intraday).
Eg:-
During 2005April-1 -- 2006March-31 period(Is it the financial period?)

1.I purchase Infosys worth Rs.100000 then sells it for 150000.
2.I purchase Infosys worth Rs.100000 then sells it for 105000(Intra day 5% gain).
3.I purchase 1 Nifty future 3000 sells it for 3100.(market lot 100)
4.I purchase 1 Nifty call 3000 premium 25, sells (square off) it for premium 50
( strik prize + premium is used to calculate brokerage and cotract not also indicate that total amount)

what is the total turnover?
(The above 4 trades may be repeated several times for profit or loss, but for simplycity and catching the essence i redused it!)
If there any confusion please ask me!
waiting for your reply!

 

[gvnarendra]

Hi aca trader,
one more question please. If I trade in equities in huge quantities in intraday (ie I enter and squareup the position on the same day) how the turnover is calculated for tax purposes? Does it come under capital gains or business income?
Thankinng you in advance
gvnarendra

 

[aca_trader]

Hi aca trader,
one more question please. If I trade in equities in huge quantities in intraday (ie I enter and squareup the position on the same day) how the turnover is calculated for tax purposes? Does it come under capital gains or business income?
Thankinng you in advance
gvnarendra

Narendra,

My apologies for the late reply. Was in Nainital enjoying the clouds on weekend.

Well, for Intraday trade, for turnover purposes, the same rule as applicable to derivatives trading will apply. As the name itself suggests, one is doing the trading here and not any investment. Hence, profits will be taxable as Business Income and not capital gain.

Best Regards,
--Ashish

 

[gvnarendra]

Narendra,

My apologies for the late reply. Was in Nainital enjoying the clouds on weekend.

Well, for Intraday trade, for turnover purposes, the same rule as applicable to derivatives trading will apply. As the name itself suggests, one is doing the trading here and not any investment. Hence, profits will be taxable as Business Income and not capital gain.

Best Regards,
--Ashish

Thank you aca trader for the reply. I was not getting any correct reply from many auditors. Now I am clear about the tax structure. Hope you enjoyed both the highs of Nainital clouds and the highs of Stock market!
Thanking you once again
gvnarendra

 

[aca_trader]

Thank you aca trader for the reply. I was not getting any correct reply from many auditors. Now I am clear about the tax structure. Hope you enjoyed both the highs of Nainital clouds and the highs of Stock market!
Thanking you once again
gvnarendra

Narendra,

It's a pleasure that I 'ld answer your quesries after learning a lot much on the forum.

Well, It was a week-end trip so the highs were not made simultaneously.

Regards,

 

[aca_trader]

Thanks Ashish!
Please clarify with a case study.
I am currently doing four types of trading,1.Futures 2.Options 3.Delivery
4.Margin(intraday).
Eg:-
During 2005April-1 -- 2006March-31 period(Is it the financial period?)

1.I purchase Infosys worth Rs.100000 then sells it for 150000.
2.I purchase Infosys worth Rs.100000 then sells it for 105000(Intra day 5% gain).
3.I purchase 1 Nifty future 3000 sells it for 3100.(market lot 100)
4.I purchase 1 Nifty call 3000 premium 25, sells (square off) it for premium 50
( strik prize + premium is used to calculate brokerage and cotract not also indicate that total amount)

what is the total turnover?
(The above 4 trades may be repeated several times for profit or loss, but for simplycity and catching the essence i redused it!)
If there any confusion please ask me!
waiting for your reply!

Total Turnover will be as follows:

1. Infy Position Trade --- Rs. 1,50,000
2. Infy Intraday Trade --- Rs. 5,000
3. NIfty Future --- Rs. 10,000 (100*100)
4. Nifty Call --- Rs. 25 (50-25) per call.

Sorry for the delay, it simply missed my eyes.

Best Regards,
--Ashish

 

[jntrade]

Thanks Ashish!
No sleeping ?
"4.Nifty call -- 25 per call", is market lot(100) also applicable here?(100*25=2500)
Thanks and Regards

 

[aca_trader]

Thanks Ashish!
No sleeping ?
"4.Nifty call -- 25 per call", is market lot(100) also applicable here?(100*25=2500)
Thanks and Regards

Well, Slept after answering the question. Yup, it'll be Rs. 2,500.

Best Regards,
--Ashish

 

[ks5084]

1) What is "turnover" in commodities trade?

for eg: I bought crude at 4431(total cost: 443100) and sold it at 4473 (sold at 447031 after brokerage). Net profit Rs3870.53 What is my turnover in this case? (is it 3870, or is it the cost+sale amount)

2) Is tax audit applicable to salaried people doing commodity trade? What does the turnover limit of Rs40 lakh mean - does it mean PROFIT or does it mean SALE PRICE +COST PRICE of all transactions during the year ?


I have recd an IT scrutiny notice, and the ACIT has brought this to my attention. Please help! Thanks in advance.

- KS

 

[comm4300]

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