Tax planning
F&O and intraday as business income, with tax audit check, Sec 43(5) and 44AB (now 63)
What this means, checked by a CA
Profits and losses from F&O are non-speculative business income and intraday equity is speculative business income, so they go in ITR-3, not under capital gains. We compute turnover the ICAI way, check if a tax audit applies, prepare the P&L and balance sheet in the return, and carry forward losses so you can use them later.
Quote
a year, fixed after a quick look
- Delivered in 3 working days after broker statements for non-audit; audit cases need the books first
- Due: AY 2026-27: ITR-3 non-audit by 31 August 2026; tax audit report by 30 September 2026; audit-case ITR by 31 October 2026 (reported dates). Loss carry forward needs a return by the due date.
How we do it: IDFD
Every case runs through the same four steps: Information, Discussion, Forms, Deliverables. You see each one ticked as it happens.
InformationWhat we need from you · 7 items
Broker tax P&L, all segments
Splits intraday, F&O, delivery
Trade-wise turnover report
Turnover for the Sec 63 (old 44AB) test
Contract notes and charges sheet
Expenses: brokerage, charges, GST
Bank and broker ledger statement
Balance sheet and cash test
Last 5 years' ITRs (Sec 58 (old 44AD) use)
Sec 58 (old 44AD) lock-in and audit trigger
Brought forward F&O and speculation lossesOptional
Set off and expiry
Trading-related expenses (internet, advisory, software)Optional
Deductible business expenses
DiscussionWhat we discuss · 6 items
Did you trade intraday equity, F&O, or both, and on which exchanges?
Speculative and non-speculative are kept apart
Did you use presumptive taxation (Sec 58, old Sec 44AD) in any of the last 5 years?
Lower profit now can trigger audit
Is your total income (salary plus others) above the basic exemption limit?
Part of the Sec 63 (old 44AB(e)) test
Was any cash used for trading, or is all money via bank?
Decides ₹1 crore or ₹10 crore limit
Do you want to carry the loss forward?
Return must be on time, ITR-3 with books
Do you also have delivery-based share sales?
Those stay under capital gains (CGN-EQT-01)
FormsForms we file · 7 items
Download tax P&L and trade-wise turnover from each broker
Where: Broker back office (for example console.zerodha.com/reports/taxpnl). Due: After 31 March
Compute turnover
F&O: sum of absolute profits and absolute losses on each squared-off trade, plus premium on options sold where not already in profit. Intraday: sum of absolute profit and loss per trade
Where: Internal working. Due: Before deciding on audit
Audit test
Audit if turnover above ₹10 crore (₹1 crore if cash over 5%), or if Sec 58 (old Sec 44AD) was used in the lock-in period and profit is now lower with income above the basic exemption limit
Where: Internal working. Due: Before 30 September
Prepare P&L and balance sheet; separate speculative and non-speculative results
Where: Internal books. Due: Before filing
If audit applies, get Form 26 (old Form 3CB and 3CD) uploaded by the auditor and accepted by the taxpayer
Where: https://www.incometax.gov.in > e-File > Income Tax Forms. Due: AY 2026-27: 30 September 2026
File ITR-3 with business codes, P&L, balance sheet, Schedule BP, CYLA, BFLA, CFL; delivery gains in Schedule CG and Sec 198 (old Sec 112A)
Where: https://www.incometax.gov.in > e-File > Income Tax Returns. Due: AY 2026-27: 31 August 2026 (non-audit) or 31 October 2026 (audit)
Pay balance tax and e-verify
Where: https://www.incometax.gov.in. Due: Before filing; verify within 30 days
DeliverablesWhat you get · 3 items
Turnover and audit decision note
When: Within 3 working days
Trading P&L and balance sheet
When: Before filing
Filed ITR-3 acknowledgement with losses carried forward
When: Same day
Questions people ask
Is intraday taxed like F&O?
No. Intraday equity is speculative business; F&O on a recognised exchange is non-speculative business.
How long can I carry forward losses?
Speculation loss 4 years against speculation income; F&O loss 8 years against business income, if filed on time.
Do I need an audit with ₹40 lakh turnover and a loss?
Not because of the loss. Check whether you used 44AD in the last 5 years and whether your income is above the basic exemption limit.
Which ITR?
ITR-3 for business income without presumptive taxation; ITR-4 only for presumptive income and with its exclusions.
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