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Income Tax Act, 1961 includes the provisions for taxation of any kind of income earned by an individual. Major heads for the categories of income for tax assessing are:
Right classification of income under different heads plays a vital role in assessing the tax liability as different methods are used for computation of tax, the deductions claimed. The tax rates are also different depending upon the class of income.
One such method for assessing the income also depends upon the nature of the transaction, i.e., whether it is speculative & non-speculative. Section 73 of the Income Tax Act, 1961[1] deals with speculative income, which is discussed henceforth.
Carry forward and set off losses from speculation transactions are dealt with under Section 73 of Income Tax Act, 1961. Speculative transactions are the purchase or sale of any goods & commodity where the commodity is not transferred or delivered; rather, they are just settled otherwise.
Section 73 of the Income Tax Act, 1961 does not apply to the following:
Following transactions are excluded from the definition of speculation transactions:
Recommended Article Section 201 of the Income Tax Act,1961 – Interest on Late Payment of TDS.
As per section 73 of the Income Tax Act, 1961 losses from Speculative Business are treated as follows:
Read, Also Section 145 of the Income Tax Act,1961.
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