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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Tax Planning and Nature of Business

Zenith Traders Pvt Ltd carries on a business of trading in shares that amounts to speculation business, and also runs a separate manufacturing unit. Under the Income-tax Act, 2025, how is the speculation business treated for computing business income?

A speculation business is deemed distinct and separate from any other business under the Income-tax Act, 2025. It is therefore computed separately and not merged with the company's manufacturing business, which matters for planning losses and set-off across businesses.

  1. AIt is merged with the manufacturing unit as a single business
  2. BIt is deemed distinct and separate from any other businessCorrect
  3. CIt is taxed under the head Capital gains
  4. DIt is treated as income from other sources

Explanation

The Act states that where speculative transactions are of such nature as to constitute a business, that speculation business is deemed distinct and separate from any other business. So it is not merged with manufacturing. Merging it would wrongly allow set-off treatment as one business.

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