Income Tax Act, 2025
Section 5: Ins. by Act 32 of 2003, s. 20 (w.e.f. 12004).
5. Ins. by Act 32 of 2003, s. 20 (w.e.f. 12004).
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(b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard
against loss in his holdings of stocks and shares through price fluctuations; or
(c) a contract entered into by a member of a forward market or a stock exchange in the course of
any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the
ordinary course of his business as such member; 1[or]
1[(d) an eligible transaction in respect of trading in derivatives referred to in clause 2[(ac)] of
section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised
stock exchange; 3[or]]
3[(e) an eligible transaction in respect of trading in commodity derivatives carried out in a
recognised association 4[, which is chargeable to commodities transaction tax under Chapter VII of
the Finance Act, 2013 (17 of 2013),]
shall not be deemed to be a speculative transaction.
5[Provided further that for the purposes of clause (e) of the first proviso, in respect of trading in
agricultural commodity derivatives, the requirement of chargeability of commodity transaction tax under
Chapter VII of the Finance Act, 2013 shall not apply.]
1 [6[Explanation 1].—For the purposes of 7[clause (d)], the expressions—
(i) “eligible transaction” means any transaction,—
(A) carried out electronically on screen-based systems through a stock broker or sub-broker or
such other intermediary registered under section 12 of the Securities and Exchange Board of
India Act, 1992 (15 of 1992) in accordance with the provisions of the Securities Contracts
(Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15
of 1992) or the Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye-laws made
or directions issued under those Acts or by banks or mutual funds on a recognised stock
exchange; and
(B) which is supported by a time stamped contract note issued by such stock broker or
sub-broker or such other intermediary to every client indicating in the contract note the unique
client identity number allotted under any Act referred to in sub-clause (A) and permanent account
number allotted under this Act;
(ii) “recognised stock exchange” means a recognised stock exchange as referred to in clause (f) of
section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such
conditions as may be prescribed and notified by the Central Government for this purpose.]
8[Explanation 2.—For the purposes of clause (e), the expressions—
(i) “commodity derivative” shall have the meaning as assigned to it in Chapter VII of the
Finance Act, 2013;
a contract in respect of stocks and shares entered into by a dealer or investor therein to guard
against loss in his holdings of stocks and shares through price fluctuations; or
a contract entered into by a member of a forward market or a stock exchange in the course of
any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the
ordinary course of his business as such member; 1[or]
1[
an eligible transaction in respect of trading in derivatives referred to in clause 2[
Act, 1956 (42 of 1956) carried out in a recognised
stock exchange; 3[or]]
3[
an eligible transaction in respect of trading in commodity derivatives carried out in a
recognised association 4[, which is chargeable to commodities transaction tax under Chapter VII of
the Finance Act, 2013 (17 of 2013),]
shall not be deemed to be a speculative transaction.
5[Provided further that for the purposes of clause
of the first proviso, in respect of trading in
agricultural commodity derivatives, the requirement of chargeability of commodity transaction tax under
Chapter VII of the Finance Act, 2013 shall not apply.]
1 [6[Explanation 1].—For the purposes of 7[clause
“eligible transaction” means any transaction,—
carried out electronically on screen-based systems through a stock broker or sub-broker or
such other intermediary registered under section 12 of the Securities and Exchange Board of
India Act, 1992 (15 of 1992) in accordance with the provisions of the Securities Contracts
Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15
of 1992) or the Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye-laws made
or directions issued under those Acts or by banks or mutual funds on a recognised stock
exchange; and
which is supported by a time stamped contract note issued by such stock broker or
sub-broker or such other intermediary to every client indicating in the contract note the unique
client identity number allotted under any Act referred to in sub-clause
and permanent account
number allotted under this Act;
“recognised stock exchange” means a recognised stock exchange as referred to in clause
of
section 2 of the Securities Contracts
Act, 1956 (42 of 1956) and which fulfils such
conditions as may be prescribed and notified by the Central Government for this purpose.]
8[Explanation 2.—For the purposes of clause
“commodity derivative” shall have the meaning as assigned to it in Chapter VII of the
Finance Act, 2013;