Skip to content

CMA Intermediate · Direct and Indirect Taxation · Profits and Gains of Business or Profession

Under section 26 of the Income-tax Act, 2025, where speculative transactions carried on by an assessee are of such nature as to constitute a business, that speculation business is:

The speculation business is deemed distinct and separate from any other business of the assessee. This separate treatment under section 26(3) is the reason its profits and losses are computed separately from the normal business.

  1. AMerged with the assessee's other businesses for computing income
  2. BTaxed under the head Income from other sources
  3. CDeemed distinct and separate from any other businessCorrect
  4. DExempt if turnover is below Rs 1 crore

Explanation

Section 26(3) states the speculation business is deemed distinct and separate from any other business. That is why its loss cannot be set off against other business profits. No turnover-based exemption is provided.

Did you get it right without looking?

One question tells you little. A timed set on Profits and Gains of Business or Profession shows your real accuracy, how long you take and where you lose marks.

Practise Profits and Gains of Business or ProfessionFree diagnostic mock

More Profits and Gains of Business or Profession questions