Jugaad ToolsF&O turnover and tax audit checker
Pick your broker's tax P&L. See your F&O turnover, whether you need a tax audit, which ITR to file and by when, and the tax on your share gains.
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How F&O trading is taxed
Futures and options on a recognised exchange are a non-speculative business, so the profit or loss goes under "profits and gains of business" and you file ITR-3. Intraday equity (bought and sold the same day, no delivery) is a speculative business. Shares you take delivery of are capital assets: sold within 12 months it is short-term capital gain taxed at 20%; held more than 12 months it is long-term capital gain taxed at 12.5% on the part above ₹1.25 lakh a year. For FY 2025-26 these are sections 111A and 112A of the 1961 Act; from FY 2026-27 they are sections 196 and 198 of the Income-tax Act, 2025.
How F&O turnover is calculated
Not the contract value, and not your net P&L. The ICAI Guidance Note on Tax Audit takes the absolute profit or loss of every trade and adds them up: a ₹50,000 profit on one trade and a ₹30,000 loss on another is ₹80,000 of turnover. Since the 2022 revision, premium received on selling options is not added separately. Intraday turnover is worked out the same way.
When is a tax audit needed?
When trading turnover is above ₹10 crore (your money moves through the bank, so cash is within 5%), or above ₹1 crore if cash receipts or payments are more than 5%. A loss alone does not need an audit. The catch is the presumptive scheme (section 44AD, now section 58): if you declared 6%/8% presumptive income in any of the last five years and this year show less (or a loss) with total income above the basic exemption limit, you need an audit. The audit rule is section 44AB for FY 2025-26 and section 63 of the new Act from FY 2026-27.
ITR-3 basics
Any F&O or intraday income means ITR-3. Without an audit it is due on 31 August (moved from 31 July by the Finance Act, 2026); with an audit, 31 October, and the audit report a month before. ITR-2 (only capital gains) stays at 31 July. File on time or you lose the right to carry losses forward: F&O losses for 8 years, intraday losses for 4 years, capital losses for 8 years.
Common mistakes
- Using contract value or the broker's "turnover" for futures as tax turnover.
- Netting profits and losses before adding them up.
- Setting an F&O loss off against salary. It can reduce interest, rent or capital gains, not salary.
- Mixing intraday losses with F&O profit. Speculative loss only offsets speculative profit.
- Skipping the return in a loss year. Without a return on time the loss can't be carried forward.
- Opting for 44AD one year and showing a loss the next without an audit.
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