Did F&O or intraday trading last year? Your ITR filing due date isn’t July 31
Profits from intraday trading and futures & options (F&O) trading are taxed differently from regular equity transactions in India. Under the income tax law, intraday trading is deemed speculative business income, while F&O gains are classified as non-speculative business income.
This classification has important implications for taxpayers as it impacts the applicable ITR form, filing deadline, tax treatment, and the rules governing loss set-off and carry forward.
ITR deadline for F&O and intraday traders
Since both intraday and F&O trading are considered business income, a taxpayer must file ITR-3. However, taxpayers opting for the presumptive taxation scheme, subject to eligibility conditions, can file their returns using ITR-4 instead.
The due date for filing ITR-3 and ITR-4 and reporting income from F&O and intraday trading is mentioned below:
- 31 August 2026- if tax audit is not applicable (For FY 2025-26)
- 31 October 2026 – if tax audit is applicable
In both cases, the moment you have even one such transaction, it means you have business income, thus your filing timeline changes.
How intraday and F&O trading gains are taxed?
Since intraday trading is deemed speculative business income, it must be reported in the income tax return (ITR) under the head “Profit and Gain From Business or Profession,” and taxed at the applicable slab rate of a person.
A person engaging in intraday trading must prepare financial statements related to the transactions for accurate reporting while filing ITR.
Meanwhile income or loss from F&O is classified as non-speculative business income, according to Section 66 of the Income Tax Act, 2025. Hence, gains arising from F&O transactions must be reported as normal business income under the head ‘Profits & Gains from Business and Profession.’ of the ITR form.
Additionally, F&O traders must maintain books of accounts if their income exceeds ₹2.5 lakh or turnover exceeds ₹25 lakh in any of the three preceding years or in the first year in case of a new business, according to ClearTax.
Difference between F&O and intraday trading
While both involve short-term trading, intraday trading and F&O are different. Intraday trading refers to buying and selling shares on the same trading day without taking delivery. In this, the trader’s primary purpose is to take advantage of the short-term price movements and make profits the very same day.
In contrast, F&O trading involves derivative contracts and is treated as non-speculative business income, even if positions are squared off on the same day. Instead of buying or selling actual shares of a company, you trade contracts whose value is based on an underlying asset such as a stock or a market index.
How are intraday and F&O losses set off
The rules for setting off losses differ for intraday and F&O trading. Intraday trading losses, being speculative in nature, can be adjusted only against speculative business income. They can also be carried forward for up to four assessment years, provided the ITR is filed within the due date.
F&O losses, on the other hand, can be set off against any income except salary in the same financial year. Unadjusted losses can be carried forward for up to eight assessment years and set off against future non-speculative business income, but not against speculative business income.
