Tax for Profits from Futures and options

Querist : Anonymous (Querist) 08 January 2010 This query is : Resolved
Hello ,
I am salaried, I also do trading in free time. I would like to know below.
1) How to calculate the tax for the profits earned from futures and options ?
2) If incurred losses can i carry those losses to next financial year.
3) If I donate the profits earned in trading to construct a temple, do i need to pay tax and how to declare it in my IT returns,

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A V Vishal (Expert) 08 January 2010
MR ANONYMOUS

REFER THE ARTICLE ON TAXATION ON FUTURE & OPTIONS.

http://www.icai.org/resource_file/10348694-698.pdf

soumitra basu (Expert) 09 January 2010
If you are in retail trade then you can opt for deemed profit under section 44AF. If your are not then profit has to be calculated in normal accounting principle. Yes, if you donate the profir to a Registered Trust under section 80G of the Income Tax Act then 50% of the Donation shall be eligble for deduction. On the balance amount you have to pay tax from your salary income.

Vineet (Expert) 11 January 2010
Dear Mr Basu, section 44AF applicable in the case of retail business involving goods and merchandise.

Dear Mr Anonymous, you can show profit or loss incurred from your trading in F&O segment as normal business income/loss. Such profits or loss have been taken out of perview of speculative transactions by specific provisions of section 43(5) proviso (d).

You should follow conservative approach while determining the profits from such transaction. i.e. if you are earning some profit on a trade not sqaurred off on the last business day, the same should not be booked but if there is any loss, the same should be booked.

You can carry forward the losses after setting off the same against incomes under other heads in the current year as normal business loss.

You can claim deduction u/s 80G for eligible donations. The organisation or trust to whome you are donating should have a valid certificate for eligibility issued by Commissioner of Income Tax.

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