Can I set-off F&O and intraday losses against other incomes?

Income Tax Income from Business or Profession
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1

I have losses in F&O in the last financial year. Can I use these losses to set-off my other incomes? I also missed reporting losses for FY 22-23 as I did not file an ITR. Can I report them now and set them off?

2

Losses from trading, if reported timely within the due date, can be used to set off your other incomes and can also be carried forward to future years.

For example, say you have short-term capital gains of ₹2L and face a loss of ₹3L from F&O. You can offset this loss against your capital gains, reducing your net taxable gains to zero. The remaining losses of ₹1L will be carried forward to the next year.

However, not all losses can be set off against all profits. There are some rules and restrictions:

  • Your F&O losses can be set off against all incomes (except salary) in the current FY. Once carried forward, they can only be set off against either F&O or intraday trading profits.
  • Intraday trading losses can only be set off against intraday gains both in the current and subsequent years.
  • Short-term losses from delivery-based trading can be set off against other short-term and long-term capital gains.
  • Long-term capital losses can only be set off against long-term capital gains.

Here’s a table that summarizes it all.

F&O and intraday losses set-off and carry forward rules
F&O and intraday losses set-off and carry forward rules1094×409 43.4 KB

But, here’s something you should remember:

In order to carry forward your losses, you must file your ITR before the due date, which is 31st July of the relevant assessment year.

3

How to Calculate Turnover for F&O Trading 2024

4

For F&O trading, turnover is calculated as the sum of absolute values of profits and losses. So, you’ll just have to add all the profit and loss without taking the negative sign into consideration.

1 Like
5

@Surbhi_Pal can I offset F&O losses against long term capital gains in current year

6

Hey @Walker,

Yes, you can.

7

Let’s assume I am having Rs.4,00,000/- FnO losses being carried forwarded in next year after the ITR filing in current year (for FY23-24, or for AY24-25). Now, if I redeem mutual funds and I also have capital gains of Rs.4,00,000/-, then can I set off this entire 4L capital gain in next year ITR (for FY24-25, or for AY25-26) against the 4L FnO losses which are being brought forward from previous years?

8

Hey @vaibhavshah,

Brought forward F&O losses can be set off against business income only. So you won’t be able to set off your carry forward f&o losses of current year against capital gains in the next year.

Hope this helps!

9

Thank you, Bharti @Bharti_Vasvani , for providing the clarification.

Yes, you are right. I was just trying out practically to fill a dummy ITR-3 form (without submitting it, of course), and I noticed that current year Business Loss (or F&O loss) is automatically set-off against current year Capital Gain (and other income such as Savings Account Interest etc) in the Schedule CYLA. However, despite bringing forward the previous year losses from the Schedule CFL, they are not set off in the Schedule BFLA against the remaining Capital Gain of the current year.

Thank you once again for prompt confirmation. Much appreciated.