By seema 
I own traded shares that are now long-term investments. I also invest in Future & Options (F&O). I am aware that gains from investing are taxed at a flat rate of 10 percent above the initial 1 lakh. My tax advisor says that because I trade in F&O as well as my dealings at the stock exchange would be considered business transactions.
Even my gains from investments in shares listed on the exchange are added to my income from business. This means I could treat my trading on the stock exchange as a business venture or investment, but not both. Does he have the right idea?
The act of purchasing and selling shares on the same day, without taking delivery, and any transactions that occur in the field of Futures and Options (F&O), should be considered business-related, which means that any gain or loss from the transactions is considered business income.
There isn’t a clause in the income tax law that says that share transactions may be considered as investments or business activities or investments, and therefore, one cannot have the option of both.
Therefore, you can report the capital gains that are long-term or short-term under the heading capital gains and show the losses and profits under F&O as business income at the same time. To be able to claim profits and losses of the shares in the form of capital gains, you need to declare your share investments as investments rather than showing them as trade stocks in the books of accounts that are maintained.
It is important to note that the earnings from sales of shares could also be considered business income if the number of transactions is large and the time frame of your investment is very small. In the same way, the source funds used to invest in these types of investments are considered when determining whether or not the investment is to be considered as a capital gain or business income.
There are no predetermined guidelines for this, but it must be decided on a case-by-case basis, based upon the facts of the particular case. However, shares that are purchased that are more than one year old can be considered capital gains if you choose to do so.