A taxpayer who has done Intraday Trading should file ITR and pay tax on this income. Intraday Trading means buying and selling stock on the same day. The trader squares off his trade on the same trading day and does not take actual delivery. The intention is to earn profits from the fluctuations in prices. Intraday Trading of Equity is considered to be a speculative Income.
Income Tax on Intraday Trading – Income Head, ITR Form, and Due Date
- Income Head – Business Income under head PGBP (Profits & Gains from Business and Profession).
Equity Intraday Income or Loss is a speculative business income or loss as per the Income Tax Act.
- ITR Form – ITR-3 (ITR Form for individuals and HUFs having PGBP Income). Since Equity Intraday Income is a business income, the taxpayer must prepare financial statements and file ITR-3 on the Income Tax Website.
- Due Date
- Up to FY 2019-20
31st July – for traders to whom audit is not applicable
30th September – for traders to whom Tax Audit is applicable - FY 2020-21 Onwards
31st July – for traders to whom Tax Audit is not applicable
31st October – for traders to whom Tax Audit is applicable
- Up to FY 2019-20
Turnover for Intraday Trading
To determine whether the audit is applicable and not to calculate the tax liability, we must calculate Trading Turnover.
Turnover for Intraday Trading = Absolute Profit
Absolute Turnover means the sum of positive and negative differences. Trading Turnover Calculation can be either through scrip wise method or trade wise method.
Example
Rahul buys 100 shares of PNB at INR 85. He sells the shares at the end of the day at INR 88. On the next day, he buys 200 shares of Tata Steel at INR 500. At the end of the day, he sells the shares at INR 450.
- Profit from Trade 1 = (88-85) * 100 = INR 300
- Loss from Trade 2 = (450-500) * 200 = INR -10,000
- Absolute Profit = 300+10000 = INR 10,300
Tax Audit on Intraday Trading
Trading Turnover up to INR 2 Cr
- If the taxpayer has incurred a loss or the profit is less than 6% of Trading Turnover and total income is more than the basic exemption limit, Tax Audit is applicable.
- If the taxpayer has a profit of more than or equal to 6% of Trading Turnover, Tax Audit is not applicable.
Trading Turnover more than INR 2 Cr and up to INR 10 Cr
- If the taxpayer has incurred a loss or the profit is less than 6% of Trading Turnover, the Tax Audit is applicable.
- If the taxpayer has a profit of more than or equal to 6% of Trading Turnover and has not opted for the Presumptive Taxation Scheme under Section 44AD, Tax Audit is applicable.
- When the taxpayer has a profit of more than or equal to 6% of Trading Turnover and has opted for the Presumptive Taxation Scheme under Sec 44AD, Tax Audit is not applicable.
Trading Turnover more than INR 10 Cr
- Tax Audit is applicable irrespective of the profit or loss.
Tax Calculation for Intraday Trading
Income Tax on trading income is calculated at prescribed slab rates as per the Income Tax Act as per the table below.
Slab Rates if Intraday Trader opts for Old Tax Regime
| Taxable Income (INR | Slab Rate |
| Up to 2,50,000 | NIL |
| 2,50,001 to 5,00,000 | 5% |
| 5,00,001 to 10,00,000 | 20% |
| More than 10,00,000 | 30% |
Note: Surcharge is liable for the total income as per the prescribed surcharge slab rates. Cess is liable at 4% on (basic tax + surcharge).
Slab Rates if Intraday Trader opts for New Tax Regime
| Taxable Income (INR) | Slab Rate |
| Up to 2,50,000 | NIL |
| 2,50,001 to 5,00,000 | 5% |
| 5,00,001 to 7,50,000 | 10% |
| 7,50,001 to 10,00,000 | 15% |
| 10,00,001 to 12,50,000 | 20% |
| 12,50,001 to 15,00,000 | 25% |
| More than 15,00,000 | 30% |
Advance Tax for Intraday Trading
A taxpayer whose tax liability on the total taxable income from all the sources during the financial year exceeds INR 10,000 is liable to pay Advance Tax. Income for Intraday Trading is a speculative business income taxable at slab rates. Thus, an Intraday Trader is liable to pay Advance Tax as follows:
Advance Tax for Intraday Trader who does not opt for Presumptive Taxation
If an Intraday Trader does not opt for presumptive taxation under Section 44AD and has intraday profits, he/she must pay Advance Tax in four installments as per the table below:
| Advance Tax Liability | Due Date |
| 15% of Tax Liability | On or before 15th June |
| 45% of Tax Liability | On or before 15th September |
| 75% of Tax Liability | On or before 15th December |
| 100% of Tax Liability | On or before 15th March |
Advance Tax for Intraday Trader who opts for Presumptive Taxation
If an Intraday Trader opts for presumptive taxation under Section 44AD and has intraday profits, he/she must pay the entire amount of Advance Tax in a single installment on or before 15th March.
New Tax Regime for Intraday Trading
Traders having income from intraday trading can opt for the new tax regime under Section 115BAC of the Income Tax Act. If the intraday trader opts for the new tax regime, here are the important points to note:
- Tax liability should be calculated as per the slab rates introduced in the new tax regime
- Trader cannot claim Chapter VI-A deductions
- The trader cannot set off any brought forward business loss
- The trader cannot carry forward the business loss to future years
- Form 10IE must be filed on the income tax website
- A trader having business income and opting for the new tax regime have an option to switch back to the old regime. However, if they opt for the new tax regime once again, they cannot opt for the old regime for the entire lifetime.
Carry Forward Loss for Intraday Traders
An equity Intraday Trader can claim and set off and carry forward the losses if a tax audit has been conducted by a professional chartered accountant in practice. This loss can be carried forward to future years and set off against future profits to reduce the income tax liability.
Loss from Equity Intraday Trading is a Speculative Business Loss. It can be set off only against Speculative Business Profits. The intraday trader can carry forward a speculative loss for 4 years.
If the Intraday Trader has opted for the new tax regime, they cannot set off brought forward business loss against business incomes. Further, they cannot carry forward the business loss to future years.
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FAQs
Turnover for Intraday Trading is the Absolute profit i.e. the sum of positive and negative differences. Based on the turnover calculation, the intraday trader can determine the applicability of the Tax Audit. The turnover can be calculated either scripwise or tradewise.
The loss from equity intraday trading is considered to be a Speculative Business Loss. It cannot be adjusted against any income except Speculative Profits. The intraday trader can carry forward the remaining loss for 4 years and adjust with future speculative profits.
Income from Intraday Trading is a speculative business income taxable at slab rates. If the tax liability of the intraday trader from all sources of income during the financial year exceeds INR 10,000, he/she is liable to pay Advance Tax in four quarterly installments as per the applicable due date.
Hello,
I am a fulltime trader trading in FnO and Commodity. This is my only source of income. I am estimating in 2023-24 my turnover, as it is calculated for trading in these segments, will surpass 3 cr leaving me ineligible for filing return under Presumptive Taxation Scheme. I have one issue to be clarified.
Do I need to pay quarterly advance taxes? It is difficult for a trader to assume, in advance, the amount of profit. For tax purposes, it is treated as a non-speculative business but the speculation component is inherent there. So if I pay at regular tax rate and by 15th March without payment of the quarterly advance taxes, is that possible?
Please Let me know. Thanks in anticipation.
Hi @Sudip
As per the recent budget announcement, the limit for Presumptive Taxation Limits has been revised to up to ₹3 crores for FY 2023-24 under section 44AD for small businesses.
Note: The limit increase is subject to a condition that 95% of the receipts must be through online channels.
Hence, if it exceeds 3 crores, you are ineligible to file a return under the presumptive scheme.
Income for F&O Trading is a non-speculative business income taxable at slab rates.
If you have NOT opted for the presumptive scheme, you are required to pay advance tax on a quarterly basis.
Only if one opts for the presumptive scheme, he/she can pay the advance tax in one installment by 15 March of the financial year.
So, yes in case you are opting for the regular scheme, you will be required to pay advance tax quarterly.
If you pay ar regular tax rate by 15th March without quarterly advance tax payment, then interest will be levied at 1% per month or part thereof u/s 234C.
Hope this helps.
Thanks for your reply.
Hi @Atharv_Talnikar
Since you’ve intraday trades, you will be filing ITR 3 as intraday trading is considered as a speculative business income.
You can enter the turnover, profits/losses etc, and proceed to file your ITR.
Here’s how you can Prepare your Income Tax Return : Help Center on Quicko.
In case you need expert assistance with your taxes, you can book a MEET.
Hi @Atharv_Talnikar
You have intraday trades which is a business income as per the law.
Sp, you can enter the balance with broker in the balance sheet and proceed.
Hi @Atharv_Talnikar
The balance sheet prepared here pertains to your Intraday trading business. Please enter the values accordingly.
You can Submit a ticket : Help Center or Ask an Expert and proceed with filing ITR 3.