Taxing the future

 In most of the developed countries, futures and options transactions far exceed the direct sale and purchase transactions in the commodities market including equities.

 Now gradually, India is also emerging as a vibrant market for derivatives. The turnover in the derivative segment has reached a record of Rs 5,848.10 crore.

 The derivatives segment was considered to be, albeit arguably, a panacea for the ills of the badla regime. Though ushered in with fanfare, vitally, related taxation issues remain mired in confusion.

 This piece attempts to discuss the issues and dilemmas that investors face after having entered the arena. However, first we shall briefly examine the exact nature of these derivative products.

 Futures

 A futures contract is an agreement between a seller and a buyer that calls for the seller (called