The Hindu Business Line : Traders welcome tax amendment for derivatives trading

The Finance Minister, Mr P. Chidambaram, in his Budget speech on Monday said trading in derivatives in specified stock exchanges will not be treated as "speculative transactions" for the purposes of the Income Tax Act.

It means that profit in the derivatives market can be set-off along with losses in the cash market or vice-versa.

Till now, this facility was not available for trades done in the derivatives market.

Moreover, profits made in derivatives market will now be taxed at 10 per cent from the 30 per cent.

Brokers said this change was necessary as trading in derivatives market is higher than cash market.

Mr Motilal Oswal, Chairman, Motilal Oswal Securities said: "With the changes in I-T Act, trades in equity and derivatives market have been made equal.''

He said since delivery in the derivatives market was not happening, the amendment in the act is welcome.

``There was anomaly in trading in derivatives and cash market, but with the change in I-T Act, the anomaly has been removed,'' said Mr Ambarish Baliga, Vice President, and Karvy Stock Broking.

Ms Deena Mehta, Managing Director, Asit C Mehta Investment Intermediates, said: "If derivatives is a hedging product, clubbing transaction in cash and derivatives market has to be brought together for Income Tax purpose was necessary.''

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