Answer

ITR

Expenses an F&O trader can claim

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  1. Facts

    Expenses incurred wholly for the trading business are deductible under Sec 37 (now Sec 34), such as brokerage, exchange charges, internet, advisory subscriptions and depreciation on a laptop. STT on these trades is generally deductible where the income is business income.

  2. Provisions and law

    • Sec 37, Income-tax Act 1961 (now Sec 34, Income-tax Act 2025)Business expenses wholly and exclusively for the business are deductible
    • Sec 36(1)(xv), Income-tax Act 1961Securities transaction tax paid on transactions whose income is business income is deductible (2025 Act number to be confirmed)
    • Sec 40A(3), Income-tax Act 1961 (now Sec 36, Income-tax Act 2025)Cash payments above ₹10,000 a day to one person are disallowed

  3. Analysis

    Keep bills and show a reasonable link to trading. Example: F&O profit ₹3 lakh, brokerage and charges ₹45,000, data subscription ₹12,000, part of internet ₹6,000 and laptop depreciation ₹15,000 gives taxable income of about ₹2.22 lakh. Personal expenses and cash payments above ₹10,000 a day to one person are not allowed.

  4. Conclusion

    1. Collect broker charges statements
    2. Collect bills for subscriptions, internet and equipment
    3. Allocate shared expenses reasonably
    4. Report in the P&L of ITR-3
    5. Keep bills for future queries

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Business or professional income return, ITR-3 (including F&O and intraday)

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