TaxTMI 
TaxTMI 
Hi, Greetings! I am an Index Option trader and wanted to understand tax implications on Derivative income. How is derivative income taxed? Would it be better to form a company and register with my broking house and show profit as business income? Are there any benefits to this strategy as oppose to showing profit as speculative income. Secondly, I would also be borrowing funds from my Parents. Thirdly, My discount broker doesn't accept LLP. Please let me know how should I be going about this. Thanks.
Tax Implication on Derivates Income
23 Mar 2016 
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Taxation of derivative income treated as business income; entity choice and reporting need professional tax advice.
Derivative trading gains are characterised as Income from Business or Profession, not speculative income. Selection of an entity form and registration with brokers can affect tax reporting and compliance; detailed, fact-specific professional advice is required to determine whether forming a company or other entity yields tax or administrative benefits. Operational points such as borrowing from family and broker restrictions on entity types must be considered in that assessment. (AI Summary)
Derivative trading gains are characterised as Income from Business or Profession, not speculative income. Selection of an entity form and registration with brokers can affect tax reporting and compliance; detailed, fact-specific professional advice is required to determine whether forming a company or other entity yields tax or administrative benefits. Operational points such as borrowing from family and broker restrictions on entity types must be considered in that assessment. (AI Summary)