A fiery online debate has ensued on social media amid reports that the government is mulling a hike in taxes for gains made on futures and options (F&O) trading.

What Happened: The government is reportedly considering reclassifying F&O transactions from “business income” to “speculative income“, which will bring earnings from these derivatives under the same tax category as lottery or cryptocurrency investments — which attract a flat tax of 30%.

If the plans come to fruition, F&O profits can only be offset against F&O losses and not losses from any other business income.

Several traders and market commentators on social media platform X expressed their dissatisfaction with such a move, saying it could burden traders unfairly. However, many others said the taxes could prove to be a good move amid an unbridled rise in speculative retail participation in F&Os.

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One X user said that the move did not take into account the ground reality of the F&O space.

“Declaring TDS over F&O which is already a low-profit format is a move without any understanding of the ground reality,” they said in a post.

Another user suggested that the only option remaining would be to become a long-term investor.

Finance influencer and content creator PR Sundar said he was considering becoming a foreign portfolio investor if the taxes are enforced.

However, others said that the fears were premature and that a change in the heading of F&O income to “speculative income” did not necessarily imply that the gains would be taxed at a flat 30% and that the only real issue was that losses could not be offset against other business income.

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