The Central Board of Direct Taxes (CBDT) recently notified the Income-tax Return (ITR) forms for AY 2026-27 (FY 2025-26). While these forms include several changes, this article explains what is new for Futures & Options (F&O) traders.
Individual traders are required to disclose their F&O trading details under schedule "Part A-Trading Account" of form ITR 3. This schedule is also available in ITR-5 and ITR-6 and needs to be filled by firms and companies (as the case may be) engaged in trading activities.
This schedule currently requires taxpayers to disclose key items debited and credited to the statement of profit and loss for the financial year. They have to provide details such as opening stock, purchases, direct expenses, sales, and closing stock.
Apart from the above, traders are also required to disclose the difference between total sales and cost of goods sold, gross profit or loss transferred to the Profit and Loss account.
What's new?
In the new ITR forms, F&O traders have to fill specific columns under the schedule "Part A-Trading Account" to report the following:
Turnover from F&O trading
Income from F&O trading credited to the Profit and Loss account.
The above details were not required to be filled by the F&O traders in this schedule of ITR-3 in AY 2025-26 (FY 2024-25)
If you are also engaged in intraday trading, you need to disclose the following under this schedule like the previous financial year:
Turnover from intraday trading
Income from intraday trading transferred to the Profit and Loss statement
How is F&O income taxed?
Income or loss from F&O is classified as a non-speculative business income. You are required to declare such income (or loss) under the head Profits and Gains of Business or Profession (PGBP). Further, gains from F&O are taxed at individual slab rates. (Read more details).
While many taxpayers report only the gains from F&O, one should also report losses as they can be set off against other business income or carried forward for up to eight years.
Which form is applicable for individual traders?
Form ITR-3 is generally applicable for individuals engaged in F&O. ITR-3 is designated for individuals and HUFs having income from business and profession. Please note that many traders mistakenly file ITR-4 on a presumptive basis. However, claiming F&O profits as per the presumptive tax provisions is risky.
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