In recent years, many people have been involved in Intraday and Future & Options Trading in the share market.
The Tax Treatment of Intraday and F&O is totally different from that of Delivery Based Shares.
While the Delivery Based Shares are taken under Capital Gains, Intraday and F&O is considered as Business Income. Therefore, it also comes under Tax Audit implications if the turnover goes beyond the prescribed limit of Rs. 10 Crores.
Taxation of Intraday and F&O Incomes:
(1)Intraday Income: It is considered as Speculative Business Income and therefore if there are losses under Intraday Trading, it cannot be merged with ANY other income. However, it can be carried forward for next 4 Assessment Years.
(2)F&O Income: It is considered as Non-Speculative Business Income. Therefore, it becomes normal business income (like any other business).
If there are losses under F&O, that can be set off against any other Income (excluding Salary and Special Rate Incomes). Losses remaining after set off can be carried forward for next 8 Assessment years.
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