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Tax on intraday and F&O trading: business income explained
Profit from intraday trading and from futures and options is usually treated as business income, not as capital gains. This guide explains what that means, how losses work, and why the audit question is one for a chartered accountant.
5 min read · Last checked 1 Nov 2026. The rates and rules in this guide come from our dated rules data and were last checked against their sources on that day.
Published 1 Nov 2026. Last updated 1 Nov 2026.
Why it is business income
Profits and losses from selling shares you keep for a long time are capital gains. Trading profits from buying and selling again and again, as in intraday and F&O, are generally treated as business income instead. Our tax calculator applies two kinds:
- Speculative business income: intraday equity trades, where you buy and sell the same shares on the same day without taking delivery.
- Non-speculative business income: futures and options (F&O), which are contracts whose value follows a share or an index.
Business income from trading is reported in the income tax return form ITR-3, not the simpler forms used for salary and capital gains alone. Delivery trades are different: see the guide on capital gains tax on shares.
How the income is taxed
Business income is added to your other income and taxed at slab rates: the rate rises in steps as your income rises. These are the new regime slabs in force on 30 Oct 2026 for an individual below 60, from our data.
| Income from | Up to | Rate |
|---|---|---|
| ₹0 | ₹4,00,000 | 0% |
| ₹4,00,000 | ₹8,00,000 | 5% |
| ₹8,00,000 | ₹12,00,000 | 10% |
| ₹12,00,000 | ₹16,00,000 | 15% |
| ₹16,00,000 | ₹20,00,000 | 20% |
| ₹20,00,000 | ₹24,00,000 | 25% |
| ₹24,00,000 | No upper limit | 30% |
- Standard deduction for salary: ₹75,000.
- Rebate: no tax up to a taxable income of ₹12,00,000, with the rebate capped at ₹60,000.
- Cess of 4% is added to the tax, and a surcharge applies at higher incomes.
The old regime has its own slabs, which the tax calculator also covers.
Losses: set-off and carry-forward
A set-off uses a loss to reduce profit from the same year. A carry-forward keeps an unused loss to use in a later year. The two kinds of trading income follow different rules, as our tax engine applies them:
| Intraday (speculative) | F&O (non-speculative) | |
|---|---|---|
| Set off in the same year against | Speculative profit only | Speculative profit, then other income except salary |
| Carried forward for | 4 financial years | 8 financial years |
| Brought-forward loss can be used against | Speculative profit only | Business profits of any kind |
The tax calculator also warns that losses can be carried forward only if the return is filed by the due date.
Source for these rules: Income-tax Act 2025 ss.111, 112 and 113 (Income-tax Act 1961 ss.74, 72 and 73), as implemented in the RupeeScope tax engine. We have not yet re-read the statute text for this page, so check the current provision before relying on it.
Turnover and the tax audit question
Business income can bring a requirement to have your accounts audited by a chartered accountant (a tax audit), which depends on your turnover and on other conditions in section 44AB. Sources we read disagree on how turnover is counted for F&O and on some of the conditions, so we do not give a verdict here and our calculator does not either when the answer is unclear.
Whether an audit applies to you is a question for a chartered accountant. The calculator counts turnover as the total of the absolute profit or loss on each trade, and shows when the answer is "check with a chartered accountant".
A worked example
Made-up numbers for the financial year 2026-27, worked out by the same engine as the tax calculator under the new regime, for someone with ₹15,00,000 of salary.
| Segment | Profits | Losses | Net |
|---|---|---|---|
| Intraday | ₹3,00,000 | ₹1,00,000 | ₹2,00,000 |
| Futures | ₹4,00,000 | ₹1,50,000 | ₹2,50,000 |
| Options | ₹6,00,000 | ₹8,00,000 | ₹-2,00,000 |
Business expenses of ₹40,000 are split between the two kinds in proportion to their turnover.
What the engine works out
| Step | Amount |
|---|---|
| Intraday result after expenses | ₹1,93,191.49 |
| F&O result after expenses | ₹16,808.51 |
| Business income added to total income | ₹2,10,000.00 |
| Taxable income after the standard deduction | ₹16,35,000.00 |
| Income tax including cess | ₹1,32,080.00 |
| Part of that tax caused by trading | ₹34,580.00 |
| Turnover as the calculator counts it | ₹23,50,000 |
| Tax audit | Check with a chartered accountant |
What this guide does not cover
- Taxpayers aged 60 or above, whose slabs differ.
- The old regime in detail, advance tax and interest for paying late.
- Presumptive taxation and how a tax audit is carried out.
- Crypto assets, which follow a separate flat rate with no loss set-off.
For your own return and any audit question, speak to a chartered accountant.
Try it with your numbers
Sources
- Union Budget 2024-25 (23 Jul 2024) Annexure on direct taxes, PIB text reproduced by gconnect.in (opens in a new tab) Checked 1 Nov 2026.
- Explanatory Memorandum to the Finance Bill 2026, direct taxes (Ministry of Finance, indiabudget.gov.in) (opens in a new tab) Checked 1 Nov 2026.
- Income-tax Act 2025 s.202 new regime slabs, statute text on eztax.in (opens in a new tab) Checked 1 Nov 2026.
How we gather and date these is explained in the methodology. Spotted a mistake? See corrections.