The approval will benefit traders in relation to trading in commodity derivatives segment of the NSE as the derivative income will be treated as business income.

Leading bourse NSE on November 29 said it has received the approval as 'Recognized Association' from Central Board of Direct Taxes (CBDT) for its commodity derivatives segment, a move that will give tax benefit to traders.

This comes after the exchange made an application to CBDT, which observed that the National Stock Exchange (NSE) has complied with all the necessary conditions and thus accorded the approval, the bourse said in a statement.

The approval will benefit traders in relation to trading in commodity derivatives segment of the NSE as the derivative income will be treated as business income.

Furthermore, all the benefits under the Income Tax provisions relating to business income including carried forward and set-off of losses will also be available.

The approval is required under the Income Tax Act which states that transactions in relation to commodity derivatives shall be taxed as business income provided the same has been done on Recognised Association. The recognition is subject to approval by CBDT and fulfilling specified conditions.