Taxes on Intraday Trading Income

Intraday trading means buying and selling securities on the same day. Intraday Trading involves settling the transactions by adjusting the differential amounts in the price fluctuations.

The total turnover of the Intraday Trading Business is calculated by considering the total absolute profit and loss. Meaning thereby, the negatives of losses will be ignored and they will be added to the profits to arrive at total turnover.

If the turnover from Intraday Trading exceeds certain specified limits i.e. ₹10 Crores then Tax Audit shall be applicable and the taxpayer is required to get the books of accounts audited by a CA.

Income Head and Type:
Intraday Trading is considered a business income. Under the business head, it is considered Speculative business income. A person can claim all the expenses incurred in relation to the income from Intraday Trading.

Income from Intraday trading shall be taxed at the normal slab rates, depending upon the regime opted for by the taxpayer. The taxpayer is required to file ITR-3 for reporting Intraday Trading Income.

Set off and Carry forward losses:
The losses can be set off against Speculative business only, i.e. the losses from Intraday Trading cannot be adjusted against any other income. However, losses from Non-speculative businesses (e.g. F&O Trading Business, Clothing Business, etc) can be adjusted against Profits from Intraday Trading in the same year. The unadjusted losses of Intraday Trading can be carried forward till next 4 Financial Years.

Let’s understand better with the help of examples:

Example 1: Mr. Bala is engaged in the business of Intraday Trading the details are in the table below:

He has incurred certain expenses like a Brokerage of ₹200 and paid ₹1,000 for training and seminars related to the Intraday Trading Business.

Solution: Calculation of Taxable Income from Intraday Trading Business:
From the above example, it can also be seen how turnover is calculated for Intraday Trading Business which is the absolute profit.

Example 2: Mr. Sinha has a profit of ₹10,00,000 from Intraday Trading Business. He also trades in the F&O trading segment out of which he has incurred losses of ₹2,00,000. Apart from this, Mr. Singh also has a salary income of ₹15,00,000. Assuming he has opted for New Regime, calculate his tax liability.

Solution: Calculation of Tax Liability of Mr. Sinha:

For any more queries, comment below!


I am a fulltime trader trading in FnO and Commodity. This is my only source of income. I am estimating in 2023-24 my turnover, as it is calculated for trading in these segments, will surpass 3 cr leaving me ineligible for filing return under Presumptive Taxation Scheme. I have one issue to be clarified.

Do I need to pay quarterly advance taxes? It is difficult for a trader to assume, in advance, the amount of profit. For tax purposes, it is treated as a non-speculative business but the speculation component is inherent there. So if I pay at regular tax rate and by 15th March without payment of the quarterly advance taxes, is that possible?

Please Let me know. Thanks in anticipation.

Hi @Sudip

As per the recent budget announcement, the limit for Presumptive Taxation Limits has been revised to up to ₹3 crores for FY 2023-24 under section 44AD for small businesses.
Note: The limit increase is subject to a condition that 95% of the receipts must be through online channels.
Hence, if it exceeds 3 crores, you are ineligible to file a return under the presumptive scheme.
Income for F&O Trading is a non-speculative business income taxable at slab rates.

If you have NOT opted for the presumptive scheme, you are required to pay advance tax on a quarterly basis.
Only if one opts for the presumptive scheme, he/she can pay the advance tax in one installment by 15 March of the financial year.

So, yes in case you are opting for the regular scheme, you will be required to pay advance tax quarterly.
If you pay ar regular tax rate by 15th March without quarterly advance tax payment, then interest will be levied at 1% per month or part thereof u/s 234C.

Hope this helps.

Thanks for your reply.

1 Like