Skip to content

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

Under the Income-tax Act as taught in NISM Equity Derivatives, how is income from transactions in equity derivatives (futures and options on a recognised exchange) by a trader generally classified?

Income from equity derivative transactions carried out on a recognised exchange is treated as non-speculative business income, because such transactions are specifically excluded from the definition of a speculative transaction. It is therefore neither capital gains nor speculative income.

  1. ANon-speculative business incomeCorrect
  2. BSpeculative business income
  3. CCapital gains
  4. DIncome from other sources

Explanation

Derivative transactions on a recognised stock exchange are specifically excluded from the definition of speculative transactions. Hence profit or loss is treated as non-speculative business income, not as capital gains or speculative income.

Did you get it right without looking?

One question tells you little. A timed set on Accounting and Taxation shows your real accuracy, how long you take and where you lose marks.

Practise Accounting and TaxationFree diagnostic mock

More Accounting and Taxation questions