In fact, there are a lot of benefits of showing the commodity income as business income. For example, the major benefit of showing commodity trading income as business income is that you can actually write off relevant expenses. If you have employed a dealer and if you are incurring administrative expenses on commodity trading, the same can be charged to the expense account. Even depreciation on equipment like servers, routers and computers can be charged.

But there is a much bigger benefit. Now that commodities also attract CTT (commodities transaction tax) such business income can also get the relief for the CTT paid, which is not available if you show the income as short term capital gains.

There is also an important aspect of setting off losses and carrying forward to future years. Generally, trading profits from commodities are shown as business income and the only difference is whether it is shown as speculative business income or non-speculative business income. That makes a big difference to your tax treatment. Speculative losses can only be written off against speculative gains but non-speculative losses can be written off against non-speculative gains and also against speculative gains. There is also a restriction on carry forward of the losses. For example, non-speculative business losses can be carried forward for a period of 8 years following the assessment in which the loss arises. But speculative losses can be carried forward only for a period of 4 years.

In a nutshell, there is a key difference between commodities taxation and other asset classes, but it is always best to opt for the business income route.