Expertise in trading and investments is becoming more accessible than ever. This has resulted in a more diverse and open-minded spectrum of trading and investment opportunities, including F&O trading. With this diversification, however, comes an increase in uncertainty and risk. It is essential to stay up-to-date with the latest news, trends, and directions to make informed decisions and mitigate risks. With the right knowledge and skills, F&O trading can provide significant financial gains and be a valuable addition to an investment portfolio.
Let us explore a few recent pieces of news in the world of F&O trading.
The financial market offers two types of derivative instruments known as Futures and Options, which allow traders to purchase or sell an underlying asset at a pre-agreed price. If a trader holds a buy position and the price increases, they will make a profit, while holding a sell position and the price decreasing will result in a profitable outcome.
Options and futures are contractual agreements that follow a standard format and are traded on various stock exchanges such as NYSE, NASDAQ, BSE, or NSE. While futures contracts permit trading of the underlying asset on the date mentioned in the contract, options can be exercised at any point before their expiry date.
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Starting in April 2023, the trading of futures and options in India’s stock and commodity markets will face higher taxes. For the sale of options and the purchase of futures contracts, the government has increased the Securities Transaction Tax (STT) by 23.52% and 25%, respectively.
The largest gathering of India’s options trading community, known as the ‘Trader’s Fair,’ was held on March 17th and 18th in Surat, Gujarat. The event offered visitors a chance to network, learn about options trading, explore investment opportunities, and improve their trading knowledge with strategies shared by over 25 experts from India and abroad. The growing interest in options trading has attracted many young traders, with some actively trading for the past decade and others joining more recently. This presents a significant opportunity that is slowly expanding.
Basic narratives to keep in mind for F&O ITR Filing
Trading income is classified into speculative and non-speculative categories. Share transfer falls under the non-speculative category, while intraday trading is considered speculative. Losses from non-speculative F&O trading can offset any other income except salary and can be carried forward for up to eight years. In contrast, losses from intraday trading can only offset speculative income and can be carried forward for up to four years. Non-speculative F&O trading is taxed according to regular slab rates, and advance tax payments are mandatory if the annual income exceeds INR 10,000.
To avoid receiving a warning letter from the tax office, it’s essential to report any profits or losses from F&O trades on your tax return. Reporting losses through ITR filing can offer tax benefits. Regardless of whether you are an individual or a corporation, trading in futures and options is typically considered business revenue. By reporting your F&O trading activity as a business, you can claim business expenses.
Several online taxation platforms are available to simplify tax filing and help with your financial journey, allowing you to maximize your tax returns without worrying about tax compliance.
