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ArticleActive traders are usually taxed as a business, not as investors — which changes everything about expenses, losses and compliance. Whether you do F&O, intraday or both, here's how to handle trading tax properly. Specific rates and audit rules are confirmed with your CA for your situation.
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-13
Quick answer
Trading income is business income — so expenses, loss set-off rules, the audit threshold and advance tax are what matter. Here's the trader's tax guide.
Intraday equity trading is treated as speculative business income; F&O is non-speculative business income; delivery-based investing is capital gains. The classification decides your tax treatment and how losses can be set off, so identify which buckets your activity falls into before anything else.
As business income, your costs of trading are deductible — brokerage, exchange and regulatory charges, internet and data subscriptions, advisory fees, software and a share of your home-office and electricity costs. These are commonly overlooked and directly reduce taxable trading profit.
Speculative (intraday) losses can only be set off against speculative gains, while F&O losses have wider set-off. Unused losses can generally be carried forward only if you file your return by the due date — missing the deadline forfeits valuable losses, so file on time even in a loss year.
Trading "turnover" is computed in a specific way (not just contract value), and crossing the threshold — or declaring profits below the presumptive rate — can trigger a tax audit. Track your computed turnover through the year so an audit requirement doesn't catch you by surprise.
With no TDS on most trading gains, you're responsible for advance tax. If your tax for the year exceeds Rs 10,000, pay across the four instalments to avoid 234B/234C interest — and re-estimate after a strong quarter so a good run doesn't create an interest bill.
Intraday is speculative business income, F&O is non-speculative business income, and delivery investing is capital gains. The classification decides your tax and loss set-off rules, so identify each bucket first.
Yes — brokerage, charges, internet, software, advisory fees and home-office costs are deductible because trading is business income. These commonly missed expenses directly reduce taxable profit.
Possibly — if your computed turnover crosses the threshold or you declare profit below the presumptive rate. Turnover is calculated in a specific way, so track it through the year; we'll confirm your case.
Trading F&O or intraday at volume? Write to the firm and we'll get your classification, turnover and audit position right.