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Introducing the “In Favour Of” filter in Case Laws.
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of <h1>Forex Derivative 'Marked to Market' Losses Not Deductible; Actual Losses Reviewed Under Income Tax Act Section 43(5.</h1> The circular addresses the treatment of losses from forex derivative trading for tax purposes. It highlights that 'Marked to Market' losses, which are notional and arise from valuing financial instruments at market rates without actual sale or settlement, cannot be set off against taxable income. These should be added back when computing taxable income. However, losses from actual forex derivative transactions may not be considered speculative if they meet certain conditions under Section 43(5) of the Income Tax Act. Assessing Officers are advised to scrutinize financial statements to identify and appropriately classify such losses.
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