Your information is correct. U/s 43(5) of the ITA, loss from commodity futures would be treated as speculative loss and can only be adjusted against speculative income. Unabsorbed loss can be carried forward for four years.
Income from Futures & Options is considered as short term gain or business income Income from Daily trading (Margin trading) is considered as short term gain or business income How the gain or loss from F&O and daily trading is set off against short term gain/loss Can we carry forward F&O and daily trading loss for 8 years
1. Income from F&O is classified as business income.
2. Income from margin trading is neither STCG nor business but speculative income
3. Loss from F&O may be set off against other business or rental or interest income but not salaries. But loss from margin trading can only be set off against income from margin trading.
4. F&O loss can be c/f for 8 years but margin trading only for 4 years.
Is Sec 80C deduction available for Income which is taxed at concessional rates like say short term capital gains on sale of shares on which STT is paid For example, If my income is Rs 1,50,000 consisting of Rs.80,000 normal income, Rs. 40,000 STT paid Short term capital gains & Rs 60,000 Taxable Long term capital gains. There is also an investment of Rs 50,000 in PPF. What would be my taxable income
The long-term capital gains are exempt whereas the STCG are taxed @10.3% flat. No deductions are allowed under Chapter-VIA like u/s 80C, 80D, for STCG which is charged to tax at the concessional rate of 10.3%.
Moreover, U/s 111A, For a resident individual or an HUF, where the total income as reduced by short-term or long-term capital gains on which tax is exigible falls below the tax threshold of Rs 1.1 Lakh (Rs 1.95 lakh for senior citizens and Rs 1.45 lakh for non-senior females) the gains would be reduced by the amount by which the total income so reduced falls short of the threshold and the balance of the gains would be taxed at the rates applicable.
In short, where the tax liability arises only because of inclusion of such capital gains in the total income, tax is levied on the excess over the minimum taxable limit.
Now, let us take your example:
Normal Income: 80,000
Less : Deduction u/s 80C: 50,000
Net Taxable income: 30,000
Add LTCG taxable @20%: 60,000
Add STCG taxable @10% : 40,000
The excess over the threshold of Rs 1,10,000 is taxable. The gap of Rs 80,000 can be setoff against either LTCG first and the balance of the gap can be setoff against the STCG later or the other way round whichever is beneficial to you. In your case it is preferable to setoff LTCG fully first since the tax payable on the LTCG is @ 20% and tax payable on STCG is @10%. The balance of Rs 20,000 of STCG will be taxable. The tax payable will be Rs 2,000 plus the education cess.
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