Do futures and options trading? Know full tax impact of derivative transactions on individual investors.

By Anonymous


Do futures and options trading? Know the full tax impact of derivative transactions on the individual investor
An Individual in India Starting Investing in Derivative Market to get multiple opportunities that sector offers. However, the Taxability of such instruments is still not clear.
While the income earned by individuals from derivative transactions is taxable in India, whether it would qualify as ‘capital gains’ or as ‘profits and gains of business or profession’ depends on the circumstances of each case.
Income Earn by derivative Market is taxable in India Under Income Tax Act in ITR 4 and ITR 3.
  • ITR 4 is for if income is declared as taxable under presumptive taxation i.e. u/s 44D
  •  and ITR 3 is for if income is declared taxable as normal business income (i.e. not under presumptive taxation)

The loss bear in derivative Market is coming under Income Tax Act In ITR 2.
  • ITR 2 is for only if the individual does not have profits and gains of business or profession.


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