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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Accounting and Taxation

A trader has the following non-speculative F&O results in a year: index futures profit Rs 3,00,000, index options loss Rs 1,80,000 and stock futures loss Rs 90,000. The trader also has salary income. Which statement about the treatment of the net F&O result is correct?

The net profit of Rs 30,000 is taxed as non-speculative business income. Profits and losses on all exchange-traded F&O trades are aggregated within the same head, so the losses reduce the Rs 3,00,000 profit, and the result is taxed at the trader's slab rates.

  1. ANet profit of Rs 30,000 is taxed as non-speculative business incomeCorrect
  2. BThe loss of Rs 1,80,000 can be set off only against speculative income
  3. COnly the Rs 3,00,000 profit is taxed; losses are ignored
  4. DNet profit is taxed as short-term capital gains

Explanation

All three are non-speculative business items and are aggregated: 3,00,000 - 1,80,000 - 90,000 = Rs 30,000 profit. It is taxed as business income at slab rates. Losses can be set off against this income, and it is not capital gain.

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