Find
Profit or loss from futures and options traded on a recognised stock exchange is non-speculative business income, not capital gains. It is reported in ITR-3 under business income and taxed at slab rates.
ITR
F&O income: business or capital gains
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Provisions
Sec 43(5), Income-tax Act 1961; Sec 28 (now Sec 26)
Analysis
If you made ₹4,00,000 in options and also ₹1,00,000 of long-term gains on delivery shares, the ₹4,00,000 is business income at your slab rate and the ₹1,00,000 is capital gains at special rates. Being business income, F&O lets you deduct related expenses. It also brings the business due date and possibly tax audit rules.
Close
- Separate F&O trades from delivery trades using the broker's tax P&L
- Report F&O under Schedule BP in ITR-3
- Report delivery trades under Schedule CG
- Check the due date and audit rules for business income
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