How F&O and intraday trading is taxed
Updated 11 October 2026
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F&O, intraday and delivery trades are taxed under different rules, with different rates, loss rules and forms. This guide is for resident individuals, uses the rules as checked on 11 October 2026, and is general education, not tax advice. To estimate your own numbers, use the F&O tax calculator.
Three kinds of trading income
- Futures and options (F&O): non-speculative business income. Your net profit is added to your other income and taxed at your slab rates.
- Intraday equity: speculative business income, because the shares are bought and sold the same day without delivery. It is also taxed at slab rates, but its losses are ring-fenced (see below).
- Delivery: usually capital gains. Short-term gains (STCG) are taxed at 20%, and long-term gains (LTCG) at 12.5% on gains above ₹1.25 lakh a year, rates in force since 23 July 2024. Which one applies depends on how long you held the shares; see intraday vs delivery.
Slab rates and the ₹12 lakh rebate
Under the new tax regime, the slabs are the same for FY 2025-26 and 2026-27; Budget 2026 did not change them. Each rate applies only to the part of your income inside that band.
| Total income | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 lakh to ₹8 lakh | 5% |
| ₹8 lakh to ₹12 lakh | 10% |
| ₹12 lakh to ₹16 lakh | 15% |
| ₹16 lakh to ₹20 lakh | 20% |
| ₹20 lakh to ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
A 4% cess is added to the tax, and a surcharge applies at high incomes (10% above ₹50 lakh, 15% above ₹1 crore and 25% above ₹2 crore). If your total income is up to ₹12 lakh, a rebate of up to ₹60,000 cancels the slab tax, and marginal relief softens the jump just above ₹12 lakh. The ₹75,000 standard deduction is only for salary, so it does not shelter trading income.
From AY 2026-27, the rebate cannot reduce tax on special-rate gains such as STCG and LTCG on shares. Two traders each have a total income of ₹10 lakh:
- Trader A has ₹10 lakh of F&O profit. Slab tax is 5% × ₹4 lakh + 10% × ₹2 lakh = ₹40,000. The rebate covers all of it, so the tax is nil.
- Trader B has ₹8 lakh of F&O profit and ₹2 lakh of STCG. Slab tax on ₹8 lakh is ₹20,000, which the rebate covers. The STCG tax of 20% × ₹2 lakh = ₹40,000 stays, plus 4% cess of ₹1,600: ₹41,600 in all.
Turnover: the ICAI method
Turnover decides whether you need a tax audit, and for trading it is not the value of what you traded. Under the ICAI Guidance Note on Tax Audit (2022), turnover for futures, options and intraday trades is the sum of the absolute profit or loss of each trade: add every profit and every loss as a positive number.
| Trade | Result | Adds to turnover |
|---|---|---|
| 1. Futures, bought then sold | Profit ₹6,000 | ₹6,000 |
| 2. Option, bought then sold | Loss ₹4,500 | ₹4,500 |
| 3. Option, sold then bought back | Profit ₹2,500 | ₹2,500 |
| 4. Futures, sold then bought back | Loss ₹9,000 | ₹9,000 |
| Total | Net loss ₹5,000 | ₹22,000 |
The year ends with a net loss of ₹5,000 and a turnover of ₹22,000. Trade 1 might have been a futures contract worth ₹10,00,000, yet only its ₹6,000 profit counts.
When you need a tax audit
A tax audit (section 44AB, now section 63) is needed when your business turnover is above ₹1 crore. The limit rises to ₹10 crore when your cash receipts and cash payments are each within 5% of the total, which is true when you trade through a broker and move money only through your bank.
There is a second, less obvious trigger. An audit can also apply when your profit is below 6% of turnover (a loss counts) and your income is above the basic exemption limit. Whether it applies to you depends on whether you used presumptive taxation (section 44AD, now section 58) in earlier years. Commentary says the new section 63 may widen this rule. That is unconfirmed, so ask a chartered accountant to read it for your case.
Losses: set-off and carry forward
For most traders this is the part that matters: SEBI's studies (2023 and 2025) found about 9 in 10 individual F&O traders lost money in the years studied (SEBI).
- F&O loss: set it off in the same year against any other income except salary. What is left can be carried forward for 8 years, against business income only.
- Intraday (speculative) loss: set off only against speculative income, in the same year or in the next 4 years.
- File on time: you can carry a loss forward only if you file your return by the due date.
Expenses you can claim
Because F&O and intraday profits are business income, you can deduct what you spend to run the trading business:
- Brokerage and the other charges on your contract notes (see trading charges explained). STT is allowed as a business expense when the income is business income, but not against capital gains.
- Your internet bill, and the business share of your phone bill.
- Depreciation on a computer you use for trading.
Keep bills and a simple record of each expense, and claim only the business part of anything you also use personally.
Advance tax
No tax is deducted at source from trading profits, so unless the tax you owe for the year is small, you must pay it during the year as advance tax, in instalments due in June, September, December and March. Each instalment covers a rising share of the year's tax, and paying too little or too late attracts interest. Because trading profits swing, work out your profit so far before each due date.
ITR-3 and the AY 2026-27 dates
Use ITR-3 if you have F&O or intraday income, even if you only made a loss. Salary and capital gains go in the same return. For FY 2025-26 (AY 2026-27):
- Returns without an audit: due 31 August 2026. We found this date only in secondary sources, not in an official notice. If you missed it, a late return may still be possible, but you cannot carry forward that year's business losses.
- Audit cases: the audit report is due on 21 October 2026 and the return on 21 November 2026, after CBDT's extension of 28 September 2026.
Confirm the dates on the income tax e-filing portal before you file.
The Income-tax Act 2025
From 1 April 2026, the Income-tax Act 2025 replaced the 1961 Act. The rates are the same, but the section numbers have changed, so expect to see both for a while:
| Rule | 1961 Act | 2025 Act |
|---|---|---|
| Tax audit | 44AB | 63 |
| Presumptive taxation | 44AD | 58 |
| Rebate | 87A | 156 |
| STCG on equity shares | 111A | 196 |
| LTCG on equity shares | 112A | 198 |
| Carry forward of business loss | 72 | 112 |
| Speculation loss | 73 | 113 |
When to see a chartered accountant
See a CA when:
- your turnover is near ₹1 crore or ₹10 crore, or your profit is below 6% of turnover, including a loss;
- you used presumptive taxation in an earlier year;
- you want to carry forward a loss, or set off one from an earlier year;
- you have salary, F&O, intraday and capital gains in the same year;
- you buy and sell delivery shares so often that it may count as a business;
- you are unsure how much advance tax to pay;
- you receive a notice from the Income Tax Department.
Ask about anything this page marks as unconfirmed, too, especially the low-profit audit rule under the new section 63.
Questions people ask
- Is F&O income speculative?
- No. F&O trading is non-speculative business income, taxed at your slab rates. Intraday equity trading is speculative business income.
- How is F&O turnover calculated?
- Under the ICAI Guidance Note, add up the profit or loss of each trade as positive numbers. It is not the value of the contracts you traded.
- Can I set off an F&O loss against my salary?
- No. An F&O loss can be set off against other income except salary in the same year, and the rest carried forward for 8 years against business income if you file on time.
- Do I need a tax audit if I made a loss?
- It depends. An audit can apply when profit is below 6% of turnover and income is above the basic exemption limit, depending on whether you used presumptive taxation before. The new Act may have changed this, so ask a chartered accountant.
- Which ITR form do traders file?
- ITR-3, if you have F&O or intraday income, even with a loss. Salary and capital gains go in the same return.