F&O and intraday income

Part of Tax on investments. 7 min read. Free lesson with a short video, quiz and practice.

How a trade is taxed depends on how you trade, not just what you trade. The same shares can create capital gains, speculative income or business income.

Three kinds of trading income

F&O as business income

• Your net F&O profit is added to your income and taxed at your slab rate.
• Genuine trading costs can be deducted: brokerage, exchange charges, STT, and a fair share of internet and data costs.
• An F&O loss can reduce other income in the same year, such as interest or capital gains, but not salary. What's left can be carried forward for up to 8 years, against business income only.
• You file ITR-3 and may need to pay advance tax.

Intraday as speculative income

Intraday equity profit is also taxed at your slab rate. But a speculative loss can be set off only against speculative profit, and carried forward for up to 4 years.

Turnover and tax audit

For traders, turnover is not the value of contracts traded. It is broadly the total of each trade's profit or loss, all counted as positive numbers. Example: trades of +₹40,000, −₹15,000 and +₹5,000 give turnover of ₹60,000. Turnover decides whether you need a tax audit by a chartered accountant. Most small traders don't, but losses or very high turnover can trigger one.

A worked example

Meera closes three option trades in a year: +₹40,000, −₹15,000 and +₹5,000. Net: ₹30,000. Trading expenses: ₹6,000. Taxable business income: ₹24,000.

At a 30% slab: ₹7,200 tax, plus cess = ₹7,488.

STT went up in 2026

From 1 April 2026, STT on selling futures rose from 0.02% to 0.05%, and on selling options from 0.1% to 0.15% of the premium. These costs apply on every trade, win or lose.

SEBI's studies have found that most individual F&O traders lose money. Learn the tax rules, but understand the risks first. You can practise F&O in Tryvest's simulator with virtual coins.