13.5How is F&O income taxed?
Time-sensitive: Checked November 2026 for FY 2026-27. Verify on incometaxindia.gov.in, NSE, BSE or SEBI before filing or trading. Rules and rates change, so check the official source before acting.
1What is it?
F&O profits are non-speculative business income, taxed at your slab rate. You file ITR-3.
2Why does it exist?
Exchange-traded derivatives are specifically treated as non-speculative business.
3Practical use
F&O losses can be set off against other income except salary in the same year, and carried forward for 8 years against business income. Expenses (internet, advisory fees, etc.) may be claimed. Tax audit may apply above certain turnover limits; F&O "turnover" is calculated in a special way. Consult a tax professional.
4Quick revision
- Non-speculative business income.
- Slab rate; ITR-3.
- Losses: no salary set-off; 8-year carry forward.
5Knowledge check
Q1. Which ITR form for F&O income?Show answer
ITR-3.
Q2. Can F&O losses offset salary?Show answer
No.
Q3. F&O loss carry forward?Show answer
8 years.