Equity Intraday Tax in India (2026): Speculative Business Income and ITR-3
Note: This is general information, not tax advice, and tax rules change. Verify the current figures against the Income Tax Act, the relevant Finance Act and ICAI guidance, and confirm your own position with a qualified Chartered Accountant.
Speculative vs non-speculative: why the label matters
Section 43(5) of the Income Tax Act defines speculative transactions as those where a contract is settled without actual delivery. Equity intraday trades, bought and sold on the same day without taking delivery, fit that definition exactly. F&O contracts are explicitly carved out of Section 43(5) and are therefore non-speculative business income.
The distinction drives three practical differences: the set-off rule, the carry-forward window, and how audit applicability is computed. Getting this wrong in ITR-3 is one of the more common trader filing mistakes.
Turnover for intraday equity
For equity intraday, turnover is the absolute sum of the net profit or net loss on each settled position, not the buy or sell value of the transaction. If you buy and sell 100 shares of a stock intraday and net a profit of โน500, that โน500 is your turnover for that trade. If you net a loss of โน300, that โน300 also counts toward turnover.
Intraday turnover is usually much lower than F&O turnover because the settlement amounts are smaller. Most intraday traders fall well below the โน10 crore threshold that triggers a mandatory audit, but the 44AB(e) loss-year trap can still apply if your total income exceeds the basic exemption limit.
Loss set-off rules
Speculative business losses can only be set off against speculative business income in the same year. They cannot be set off against:
F&O profits (non-speculative business income), salary, capital gains, or any other head of income. The restriction is absolute for intraday equity losses.
Non-speculative F&O losses, by contrast, can be set off against any income head except salary in the same year. That flexibility does not extend to speculative losses.
Carry-forward: 4 years, not 8
F&O losses carry forward for 8 assessment years. Intraday losses carry forward for only 4 assessment years, and they can only be set off against future speculative gains, not against future F&O profits.
The 4-year clock starts from the year the loss arose. AY 2025-26 intraday losses expire at the end of AY 2029-30 if unused. Filing ITR-3 by the due date is a condition for the carry-forward. A belated return forfeits the carry-forward entirely.
ITR form and schedules
Both intraday equity and F&O require ITR-3. The intraday income goes under the speculative business head in Schedule BP, and F&O goes under the non-speculative business head. If you have both, they sit in the same return but in separate sub-schedules with separate P&L figures.
Pure intraday traders with no F&O still file ITR-3 because any business income, whether speculative or not, takes you out of ITR-1 and ITR-2 territory.
Expenses: what can you deduct?
Deductible expenses follow the same logic as F&O: brokerage, STT (on intraday equity), exchange charges, SEBI turnover charges, GST on brokerage, internet costs used for trading, and software subscriptions are all allowable against speculative business income. The full list is the same as the deductible trading expenses checklist, applied proportionally if you also run F&O.
Where you have both intraday and F&O activity, allocate shared expenses like internet or software on a reasonable basis rather than claiming the full cost against one head.
STT and the 43(5) carve-out
The speculative-transaction rule in Section 43(5) has a carve-out: transactions where STT has been paid are treated as non-speculative. This was introduced to encourage exchange-traded activity. Equity intraday on recognised exchanges, where STT is charged, technically qualifies for the carve-out.
In practice, the Income Tax Act and CBDT interpretation still treat intraday equity as speculative for carry-forward and set-off purposes. Verify the current position with a Chartered Accountant before treating intraday losses as non-speculative in your return.
Aggregate view across intraday and F&O
Most active traders run both intraday equity and F&O. Aktai Tax separates the two when you upload your broker P&L: speculative turnover and non-speculative turnover are computed separately, expenses are allocated, and the audit check runs on the combined picture. Upload your broker files at Aktai Tax and the report handles the separation automatically.
Frequently asked questions
Is intraday trading income taxed as capital gains?
No. Equity intraday trading is treated as speculative business income under Section 43(5) of the Income Tax Act. It is taxed at your income slab rate, not at the flat STCG or LTCG rates, and you file ITR-3, not ITR-2.
Can I set off an intraday loss against my F&O profit?
No. Speculative business losses (intraday equity) can only be set off against speculative business gains. They cannot be set off against non-speculative business income like F&O profits. F&O losses are non-speculative and follow different set-off rules.
How long can I carry forward an intraday trading loss?
Four assessment years, compared to eight years for F&O losses. You must file ITR-3 by the due date to preserve the carry-forward. A late or belated return forfeits it.
What is the turnover for intraday trading?
For equity intraday, turnover is the absolute value of the net settlement amount per scrip per day, which is the net profit plus the net loss, both taken as positive numbers. It is not the buy-side or sell-side value of transactions.