ITR
Short-term capital gains rule out ITR-1
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Facts
No. Any short-term capital gain makes you ineligible for ITR-1. Intraday trading is treated as speculative business income, which needs ITR-3.
Provisions and law
- Rule 12, Income-tax Rules 1962 (now Rule 164, Income-tax Rules 2026)Sets which ITR form applies, its eligibility conditions and how it is verified.
- Sec 111A, Income-tax Act 1961 (now Sec 196)Short-term gains on listed equity are taxed at a special rate.
Analysis
If you only had delivery-based short-term gains on shares, use ITR-2. If you did intraday or futures and options, that is business income and ITR-3 applies, even if the amounts are small or a loss. Filing ITR-1 in these cases can draw a defective return notice.
Conclusion
- Check your broker's tax P&L for the year.
- Separate delivery gains from intraday and F&O.
- Use ITR-2 for capital gains only.
- Use ITR-3 if there is intraday or F&O.
- Do not file ITR-1 in either case.
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