Accounting & Taxation Issues relating to Capital Market Transactions

‣ If there is a loss in daily jobbing transactions whether STT on that can
be used in other security business transactions? STT paid on
speculative Transactions can not be utilized for non-speculative
transactions.
‣ If there is profit in all security transactions treated as business income
(like derivative transactions, daily jobbing transactions and delivery
based business transactions), whether STT paid on them should be
used collectively or separately. STT paid on speculative and nonspeculative
transactions is to be considered separately.
(ii)
Rates of STT
STT will be levied on sale of an equity share (payable by seller)in a
company or a unit of an equity oriented fund, where the transaction of
such sale is entered into in a recognized stock exchange and settled
otherwise than actual delivery. The rates are :
1-10-2004 to 31-5-2005 0.015%
1-06-2005 to 31-5-2006 0.02%
From 1-06-2006 0.025%
(iii) STT paid is an allowable expenditure from Asstt. Year 2009-10 due
to deletion of sec. 40 (a) (ib) w.e.f. 1.4.2009.
(F) (i) CARRY FORWARD & SET OFF OF LOSSES U/S 70, 71,72- for full
details please see taxation of derivatives.
‣ Sec. 70 – Set off of loss from one source against income from
another source under the same head of income.
‣ Sec. 71 – Set off of loss from one head against income from another.
‣ Sec. 72 – Carry forward and set off of business losses.
(ii) Sec. 73 – Losses in speculation business – including deeming
Provisions.
Loss in speculation business shall not be set off except against profit and
gains, if any, of another speculation business.
In respect of allowance on account of depreciation or capital expenditure on
scientific research, the provisions of sub-section (2) of section 72 shall apply
in relation to speculation business as they apply in relation to any other
business.