F&O and Intraday Taxation: ITR-3, Turnover, Audit & Loss Rules
F&O = non-speculative business income. Intraday equity = speculative. Both need ITR-3 — never ITR-1/2. Audit only above ₹10 cr turnover (digital). Losses carry forward if you file on time.
How each trade is classified
| Activity | Treatment | Form |
|---|---|---|
| Futures & Options | Non-speculative business income | ITR-3 |
| Intraday equity (no delivery) | Speculative business income | ITR-3 |
| Delivery equity / equity MF | Capital gains (20% STCG / 12.5% LTCG) | ITR-2* |
*Salaried + F&O? You still file ITR-3 (business income dominates the form choice).
Turnover and the audit question
F&O turnover = absolute profit & loss across trades (per ICAI guidance) — not premium value. Your broker's turnover statement does this math.
| Situation | Audit? |
|---|---|
| Turnover > ₹10 cr (≥95% digital — automatic for F&O) | Yes — 44AB(a) |
| Turnover ≤ ₹10 cr, never opted for 44AD — even in loss | No |
| Opted into 44AD earlier, opted out, now profit <6% or loss | Yes — 44AB(e) + 5-year 44AD bar |
Loss set-off and carry-forward
| Loss type | Set off against | Carry forward |
|---|---|---|
| F&O (non-speculative) | Any income except salary | 8 years (file by due date) |
| Intraday (speculative) | Only speculative profits | 4 years (file by due date) |
Deductible trading expenses: brokerage, STT, data/internet, advisory, depreciation on your trading setup. Trading profits also attract quarterly advance tax. Advance-tax dates → · ITR forms →
By TaxSetu Editorial Team · Last reviewed: 7 October 2026
Based on the Income-tax Act 2025, Income Tax Rules 2026 and CBDT notifications; sections per the Income-tax Act 1961 (as amended) with 2025-Act mappings where notified · Verify on the official portal: incometax.gov.in
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Frequently Asked Questions
ITR-3, always — F&O is non-speculative business income, so ITR-1 and ITR-2 are invalid even if you are salaried. Intraday equity also needs ITR-3.
No, as long as turnover is under ₹10 crore and you never opted in-and-out of the 44AD presumptive scheme. Losses alone don't trigger an audit.
Intraday equity (no delivery) is speculative business income: losses set off only against speculative gains and carry forward 4 years. F&O losses set off against any income except salary and carry forward 8 years.
Yes, for business income — STT, brokerage, data costs and advisory fees are all deductible trading expenses. Investors (capital gains) cannot deduct STT.