I made around 30L profits from intraday equity trading over the year (no F&O) and reinvested those profits into stocks. I currently have unrealized losses on those investments (portfolio almost down by 50 percent).
If I book these losses, can they be offset against my intraday trading profits?
Hey @Vi_Singh1,
Welcome to the community!
Intraday equity trading is treated as speculative business income. And losses from your stock investments (delivery-based shares) are treated as capital losses, not intraday losses.
So,
Capital losses cannot be set off against speculative business income.
You can only:
So in your case, even if you book the unrealized losses from your stock portfolio, they cannot be adjusted against your ₹30L intraday profits.
While researching the same i stumbled upon this document,
You can see point no 1, it says:
```Loss from speculative business cannot be set off against any income other than income from speculative business. However, non-speculative business loss can be set off against income from speculative business.```
If it is correct, then since my investments are less than one year old (short-term), would the resulting losses be eligible to offset my intraday trading income?
@Diti_Savalia Can you confirm the validity of this statement from the pdf?
Hey,
There’s a small mix-up here.
Non-speculative business loss refers to losses from F&O trading. These can be set off against speculative income. But short-term capital loss from share investments is not a non-speculative business loss, it is a capital loss. So, the resulting loss still won’t be eligible to offset your intraday trading profits.
If capital gain is allowed to be reported as business income, then capital loss should also be allowed as business income, as trading is my only source of income.
Yes, you can declare your share trading income (for holdings less than one year) as business income and can offset them any other business gains as in your case speculative gains from intraday. However, once you choose to treat it as business income, you cannot switch back to capital gains or capital losses in the following year. It must continue to be reported as business income or loss.
Hey, if you are showing your capital gains as business income, then any loss from such transactions would be treated as non-speculative business loss and hence it could be set off against your intraday gains.
No. Intraday equity profits are treated as speculative business income, while short term capital losses are capital gains. Speculative income cannot be offset by capital losses under Indian tax rules.