For financial year 2025-26 (Assessment Year 2026-27), individuals earning income through futures and options (F&O) or intraday trading face distinct Income Tax Return (ITR) filing deadlines compared to salaried employees and general taxpayers. This distinction arises because both F&O and intraday trading are categorized as business income under the Income Tax Act.
Extended ITR Deadlines for Traders
Unlike the standard July 31 deadline applicable to most salaried individuals, traders reporting business income from F&O or intraday activities benefit from extended due dates:
- August 31, 2026: For taxpayers whose accounts are not subject to a tax audit.
- October 31, 2026: For taxpayers whose accounts are required to undergo a tax audit.
Even a single F&O or intraday transaction can classify income as business income, making these extended deadlines applicable.
Tax Treatment: Speculative vs. Non-Speculative
The Income Tax Act differentiates how F&O and intraday trading income are treated:
- Intraday Trading: This is classified as speculative business income. Profits are taxed at the individual's applicable income tax slab rate and must be reported under the head "Profits and Gains from Business or Profession."
- Futures & Options (F&O) Trading: This is treated as non-speculative business income. Gains are also reported under "Profits and Gains from Business or Profession," but the specific tax rules and loss adjustment mechanisms differ from speculative income.
Loss Adjustment Rules
The ability to set off and carry forward losses varies significantly between the two types of trading:
- Intraday Trading Losses: These can only be adjusted against other speculative business income. Unabsorbed losses may be carried forward for up to four assessment years, provided the ITR is filed by the prescribed due date.
- F&O Trading Losses: These losses offer greater flexibility, as they can be set off against any income during the same financial year, with the sole exception of salary income. Unabsorbed F&O losses can be carried forward for up to eight assessment years and utilized against future non-speculative business income.
Requirement for Books of Accounts
F&O traders may also be required to maintain proper books of accounts. This obligation typically arises if their income surpasses a predefined threshold or if their trading turnover exceeds specific limits outlined in the Income Tax Act.