What is a Non–speculative Business Income?
As per section 43(5) of the Income Tax Act 1961, income earned from trading in F&O (both intraday and carry forward) is categorised as a Non-Speculative Business Income.
F&O is considered as 'non-speculative' as these instruments are used for hedging and also there is actual taking/giving delivery of the underlying contract.
Non-speculative business income is added to your total income, and taxes are applicable based on the tax bracket you fall under.
For example, Mr Jomon earns Rs. 9 lakhs as salary and Rs. 15 lakhs as profits from F&O intraday trading during the financial year. Hence, he will be taxed as per the applicable income tax slab on his total income of Rs. 24 lakhs.
Income earned from intraday/non-delivery in equity shares is classidies as a Speculative business income.
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