look news india
Ahmedabad: The popularity of the futures market in the Indian stock market is increasing day by day. The government is especially trying to keep retail investors away from this segment, but now there is news that the government is going to increase the tax on this segment. According to media reports, the government can bring it into a higher tax bracket by changing the earning tag of the F&O market. However, now there is a difference of opinion on the issue that if the government increases the tax to keep retail investors away from the futures market, then a section of the society is saying that the government can increase the tax to collect more tax revenue. This is also a rapidly growing segment.
The government is considering various options to discourage retail participation in the futures and options segment. The report said that the proposed measures could include moving FND from 'business income' to 'speculative income' or introducing TDS in the next budget. Broadly, converting futures market income from 'business income' to 'speculative income' would be treated at par with lottery or crypto investments and taxed accordingly.
Income from F&O transactions is currently taxed as business income. The income is added to business or salary income and taxed at the applicable slab of 5, 20 or 30 per cent.
Moreover, since it is a business income, its profit can be adjusted against any other loss and FND loss can be written off against other profit, but if it is labeled as 'speculative income', then the country's maximum tax of 30 percent is levied. And other taxes like crypto currency and lottery income will be recovered when the futures market profit cannot be offset against other losses.
Moreover, according to the report, another tool favoured by the government in recent years is tax deduction at source (TDS).
India accounts for 81% of global F&O volumes
Data from the Futures Industry Association shows that a total of 8,484 million contracts were traded on the NSE in April, the highest among all global markets. BSE is second only to NSE where over 2224 million contracts changed hands in April.
If year-on-year growth is taken into account, F&D volumes on NSE have registered a bumper growth of 92 per cent. More importantly, the combined volumes of BSE and NSE accounted for nearly 81 per cent of global equity derivatives trading in April. The shocking data is that over 692 million contracts were traded on the third-ranked Brazil B3 index in April.
For BSE, the revenue from the F&O segment in each month starting December 2023 is expected to be Rs. 30 crores. In February this year, the monthly income from the equity derivatives segment touched Rs. 43.04 crores. NSE is projected to earn a bumper Rs. 12,049 crores through transaction charges in FY 2024.
