Commodity trading (like crude oil, gold, silver, natural gas, etc.) is treated differently from equity delivery investing.

In India, commodity trading is treated as business income, not capital gains.

🔹 1️ How Commodity Trading Income Is Taxed

If you trade in:

• MCX (Gold, Silver, Crude Oil, Natural Gas)
• NCDEX (Agricultural commodities)
• Commodity futures & options

👉 It is treated as Non-Speculative Business Income.

That means:

• Profit is added to your total income.
• Taxed as per your income tax slab.
• You can deduct trading-related expenses.

Step-by-Step: How to Calculate Tax on Commodity Trading

Step 1️: Calculate Gross Profit or Loss

Use:

Total Sell Value – Total Buy Value – Brokerage – Exchange Charges – Other Charges

Your broker’s P&L statement gives this.

Example:

• Total Profit from Crude Oil Trading: ₹3,50,000
• Brokerage & Charges: ₹20,000

Net Business Income = ₹3,30,000

Step 2️: Deduct Allowable Expenses

You can deduct:

• Brokerage
• Exchange transaction charges
• Internet bills (proportionate)
• Trading software subscription
• Advisory fees
• Laptop depreciation (if used for trading)
• Office rent (if applicable)

Suppose additional expenses = ₹30,000

Net Taxable Commodity Income = ₹3,00,000

Step 3️: Add to Other Income

Example:

• Salary Income: ₹8,00,000
• Commodity Trading Income: ₹3,00,000

Total Income = ₹11,00,000

Now tax will be calculated as per your slab.

Example Tax Calculation

If you're under new regime (assume 30% slab):

Tax on ₹11,00,000 ≈ As per slab rates
Commodity income taxed at marginal slab rate.

Important:
There is no 15% short-term capital gains rule like equity.

What If You Have Loss?

Commodity trading loss can:

✔ Be set off against other business income
✔ Be carried forward for 8 years

Very important for active traders.

Is Audit Required?

Audit under Section 44AB is required if:

• Turnover exceeds ₹10 crore (if digital)
• Or profits less than 6%/8% of turnover under presumptive taxation

Commodity turnover calculation is tricky:

Turnover = Absolute profit + Absolute loss (not total trade value)

Example:

Trade 1 profit: ₹1,00,000
Trade 2 loss: ₹70,000

Turnover = ₹1,70,000

Not contract value.

⚠️ Important Points

• You must file ITR-3 (business income).
• Maintain trading statement.
• Advance tax applies if liability exceeds ₹10,000.
• GST does NOT apply to trading profits.
• STT is not applicable in commodities like equity.

📊 Quick Summary

Type	Commodity Trading
Tax Category	Business Income
Slab Based?	Yes
Can Deduct Expenses?	Yes
Loss Carry Forward	8 Years
Audit Applicable?	If threshold crossed

FAQs

1️. Is commodity trading speculative income?

No. Commodity futures trading is considered non-speculative business income.

2️. Do I pay 30% tax on commodity profits?

Not necessarily. Tax depends on your income slab.

3️. Can I show commodity trading under presumptive taxation?

Yes, under Section 44AD (if eligible).

4️. Is GST applicable on commodity trading profit?

No. GST applies to brokerage, not your trading profit.

5️. Is advance tax required?

Yes, if total tax liability exceeds ₹10,000 in a year.