Suppose someone trades frequently in shares that are tradeable on a foreign exchange like the New York Stock Exchange. Is there any IT Act provision or case law that provides scope for being able to show this as Business Income ( just like trading in Indian listed shares can sometimes be shown as Business Income) and claim business expenses against it , rather than have to show this as STCG on unlisted shares ?
What if one trades options on shares of foreign companies ? Can that be shown as Business Income?
RBI allows investment in foreign companies by regulating them through many routes like – Liberalised Remittance Scheme (LRS) under FEMA Act, Overseas Direct Investment (ODI), Income Tax Act 1961 compliances, etc. Investors investing in foreign stocks may have to comply with these regulations laid down by the Government of India.
As per the Income Tax Act, any profits on investment of foreign shares has to be treated as capital gains. Thus, we recommend to report it as Capital Gains.
LRS also prohibits user from doing speculative business activity.
Refer article for more details
Hope this helps.
Thanks for your reply. Could you please point me to the specific sections in the Income Tax Act where this is either stated directly or implied ?