An Insightful Dive into NSE trading Extension and F&O taxation guide

Let’s begin with the news on the extension of trading timings for interest rate derivatives:

 Starting from February 23, 2023, the National Stock Exchange of India extended the market trade timings for interest rate derivatives until 5 pm. Additionally, NSE is discussing with market participants about potentially extending trading hours for F&O filing and equity trading until 11:55 pm. This decision is primarily driven by concerns that trading volumes are moving offshore due to limited trading hours on Indian exchanges. Experts predict that this change may have an impact on traders’ personal lives outside of their trading activities. 

How will the evolving impacts of the extension of trading hours pan out? Let’s find out!  

• Longer trading hours could lead to increased trading volumes as traders have more opportunities to enter and exit the market, resulting in higher liquidity and more activity.

• Indian traders and investors can benefit from longer trading hours by participating in global markets during their respective trading hours, leading to improved investment opportunities.

• Brokerages may benefit from increased trading volumes and transaction fees. However, they are also likely to face higher operational costs, including staff and technology infrastructure.

• Longer trading hours may present challenges for traders, such as longer work hours, potential burnout and fatigue, and higher transaction costs due to increased volatility. 

According to specialists, it is crucial to prolong trading hours, particularly in the equity derivatives and currency segments, to mitigate overnight risk resulting from global uncertainties. Currently, in India, the equity market’s trading hours for both the cash and derivatives segments are from 9:00 AM to 3:30 PM.

Talking of the valuable insights of trading protocols, let us take a look at the Future and Options ITR filing. 

The ITR-3 form gets used for reporting earnings from business or profession (PGBP), and taxes are computed according to the appropriate tax bracket for each person.

After submitting your F&O ITR on time, you can subtract costs linked to trading. 

These may include expenses such as broker’s commission, Demat fees, the expense of research reports, depreciation of trading equipment, and internet expenses from your earned income.

 To claim expenditures for business purposes, it’s crucial to ensure that they were incurred directly and solely for that purpose. Such costs may involve brokerage, broker’s commission, subscriptions to trading-related publications, phone and internet bills, consultancy fees, and wages paid to employees recruited for business purposes.

It is necessary to maintain accurate records of receipts and invoices for such expenditures and to ensure that payments are made via cheques or bank transfers instead of cash. Additionally, you may be able to claim expenses that exceed Rs. 10,000 in cash.

If an expense has both personal and business-related components, it’s recommended to claim a reasonable portion of it as a business expense.

Key takeaways to bear in mind when submitting F&O ITR:

1) To prevent receiving a notice from the tax department, it’s important to incorporate any gains or losses from F&O transactions in your tax return. 

2) If you report your F&O trading as a business, you may be eligible to claim business expenditures.

3) There may also be tax benefits to reporting losses. Whether you’re an individual or a corporation, dealing in futures and options is typically considered business income.

The reason for the ambiguity surrounding future and options trading, and trading in general, is the lack of understanding of the corresponding regulations. One of these regulations is F&O ITR Filing. However, there is no need to be concerned because TaxBuddy, one of India’s leading tax filing platforms, can assist you! With its specialized subscription package for Future and Options trading, you can alleviate the burden of complying with tax regulations related to it.