Budget 2024: Profits from F&O segment may be moved to ‘speculative income’, to attract higher tax rate: Report

  • Budget 2024: The government is said to consider moving income from F&O trading from the head of ‘business income’ to ‘speculative income’ in the Budget, a report said.

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First Published20 Jun 2024, 02:05 PM IST
Budget 2024: Finance Minister Nirmala Sitharaman may also propose introducing a tax-deductible-at-source (TDS) in the upcoming Budget, the report said.
Budget 2024: Finance Minister Nirmala Sitharaman may also propose introducing a tax-deductible-at-source (TDS) in the upcoming Budget, the report said.(Image: Pixabay)

The upcoming Union Budget is expected to propose changes in the tax treatment of income from futures and options (F&O) segment with an aim to discourage retail participation in the derivatives trading, a report said.

Along with various options, the government is said to consider moving income from F&O trading from the head of ‘business income’ to ‘speculative income’ in the Budget, Financial Express reported quoting sources.

Moreover, Finance Minister Nirmala Sitharaman may also propose introducing a tax-deductible-at-source (TDS) in the upcoming Budget, the business daily reported.

Also Read: Budget 2024: Will Finance Minister Nirmala Sitharaman increase income tax exemption limit?

“The government and regulators have been worried for quite some time about the increased participation of retail investors in the derivatives market. There are fears that if markets correct, there could be significant losses to retail investors, leading to overall dampening of sentiments,” the source told Financial Express.

Income from F&O transactions is now taxed as business income. The income is added to business or salary income and then taxed as per the applicable tax slabs. 

However, if the head of F&O income is changed to ‘speculative income’ from ‘business income’, it will be considered at par with lottery or crypto investments.

The move may also take away the advantage of offsetting the gains against any other losses. 

Also Read: Modi 3.0 Budget 2024 Expectations: What are Finance Minister Nirmala Sitharaman's plans for taxpayers?

According to the present rules, profits from F&O transactions can be offset with losses in other businesses and vice-versa. Moving to ‘speculative income’ will change this and the losses from F&O trading can be offset against gains only from F&O trading.

According to the newspaper report, the government can also introduce TDS on F&O income as it was introduced in the Budget 2023-24 on cryptocurrencies.

It is to be noted that the amount paid as TDS can only be claimed while filing returns. 

The other options on the cards include a straight 30% tax on F&O income, similar to crypto currencies, the report added.

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First Published:20 Jun 2024, 02:05 PM IST
HomeBudgetBudget ExpectationsBudget 2024: Profits from F&O segment may be moved to ‘speculative income’, to attract higher tax rate: Report

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