It’s July, and if you’ve been active in the markets this year, your ITR looks a little different from the usual salary-plus-investments return. Trading income doesn’t go under capital gains. It goes under business income, with its own tax rules, its own loss set-off logic, and its own audit thresholds.
Most traders only discover at filing time that intraday and F&O are taxed differently from each other and that the distinction affects not just the rate, but how you can use your losses. What fewer traders know is that since trading is treated as a business, you can claim real expenses against it: brokerage, STT, internet bills, courses, CA fees. These deductions are available under both regimes and can make a real dent in what you owe.
Once the income side is sorted, there’s one more step before you hit submit: check your AIS. The Annual Information Statement pulls data from banks, depositories, and registrars, and errors do slip through. A mismatch between your ITR and your AIS is one of the more common triggers for a scrutiny notice.
We’ve handpicked threads on these topics in today’s edition.
How are intraday and F&O profits taxed differently — and why does it matter for your losses?
Trading income doesn’t go under capital gains. Both intraday and F&O profits are taxed as business income at your slab rate — but they fall into two separate categories, speculative and non-speculative, and that distinction shapes exactly how long you can carry your losses forward and what you’re allowed to set them off against…Continue Reading →
What expenses can a trader actually deduct while filing?
Since trading is treated as a business, you can claim legitimate expenses against your profits before tax is calculated. Brokerage, STT, exchange charges, internet bills, courses, CA fees, depreciation on your laptop — all claimable. And unlike most deductions, these are available under both the old and new regime. The list is longer than most traders…Continue Reading →
Your ITR looks right — but does your AIS agree?
The Annual Information Statement pulls data from banks, depositories, and registrars. Errors from those sources land directly in your AIS. Capital gains reported at the closing price instead of the actual sale price. FD interest counted twice. Property value appearing in full under each co-owner’s PAN. If any of this slips through unnoticed before you…Continue Reading →
FAQs
Can I set off F&O losses against my salary income?
No. Non-speculative losses from F&O can be set off against any income head except salary in the same year — capital gains, interest income, rental income, and other business income all qualify. If they aren’t fully absorbed, they can be carried forward for 8 years, but once carried forward, can only be set off against business income.
How long can I carry forward intraday losses?
Speculative losses from intraday trading can be carried forward for 4 years. They can only be set off against future speculative profits — not against F&O income or any other head.
Can I claim trading expenses under the new tax regime?
Yes. Business expenses are claimable under both the old and new regime — brokerage, STT, internet bills, depreciation on equipment, CA fees, and courses all qualify. The one exception is additional depreciation under Section 32(1)(iia), which is not allowed under the new regime.
What should I do if I spot an error in my AIS before filing?
Submit AIS Feedback on the Income Tax Portal — log in, navigate to AIS on the Compliance Portal, find the transaction with the error, and click Feedback. You don’t need to wait for the AIS to update before filing. File your return with the correct values and keep supporting documents ready in case the ITD asks for clarification.