In this guide
Filing ITR-3 for AY 2026-27 can become complicated when a taxpayer has intraday trading, Futures & Options (F&O), delivery-based investments, salary, interest and dividends together. Two particularly common difficulties are calculating trading turnover correctly and deciding what should be reported in the balance sheet.
ITR-3 is applicable to individuals and HUFs having income chargeable under Profits and Gains of Business or Profession and can also accommodate salary, house property, capital gains and income from other sources.
For professional ITR-3 filing:
Intraday, F&O and Delivery Shares: Tax Treatment Is Different
Do not report every stock-market transaction under the same head.
| Transaction | Normal tax treatment |
|---|---|
| Equity intraday without delivery | Speculative business income |
| Eligible F&O on recognised stock exchange | Non-speculative business income |
| Delivery shares held as investment | Capital gains |
| Delivery shares held as stock-in-trade | Business income |
| Dividend | Income from Other Sources |
Section 43(5) generally treats transactions settled without actual delivery as speculative, while eligible derivative transactions carried out on a recognised stock exchange are specifically excluded from speculative treatment.
Therefore, equity intraday and F&O losses should not simply be combined into one business-loss figure.
Are Delivery-Based Shares Always Capital Gains?
No.
Whether delivery shares produce capital gains or business income depends on factors such as the taxpayer’s treatment of the shares as investments or stock-in-trade and the surrounding facts.
CBDT Circular No. 6/2016 provides important guidance. If the taxpayer treats listed securities as stock-in-trade, the resulting income is business income. For listed shares held for more than 12 months, where the taxpayer consistently chooses capital-gains treatment, CBDT directed that such treatment ordinarily should not be disputed, subject to the circular’s conditions.
Where delivery shares are taxable as capital gains in FY 2025-26, qualifying Section 111A STCG is generally taxed at 20%, while Section 112A LTCG is generally taxed at 12.5% on gains exceeding ₹1.25 lakh.
Free tax audit tool: Check tax audit applicability using the TaxClear calculator. Review current business and professional thresholds, presumptive-tax conditions and the applicable audit-report route. Apply the provisions relevant to your filing period.
How Is Intraday and F&O Turnover Calculated?
Trading turnover is not the total value of shares or derivative contracts bought and sold.
For intraday and derivative trading, turnover is determined using the recognised tax-audit methodology rather than simply adding contract values. Broker tax P&L reports can be a useful starting point, but the turnover used for income-tax and audit purposes should be checked against the applicable tax-audit principles.
This matters because turnover affects:
- Books-of-account requirements;
- Tax-audit applicability;
- Profit/loss reporting; and
- The correct completion of ITR-3 business schedules.
Do not assume a broker-generated turnover number is automatically correct for every tax situation.
Does Every Intraday Trader Need Books of Account?
The statement that “intraday traders do not need books” is too broad.
For an individual or HUF carrying on a non-specified business/profession, Section 44AA can require books where business/professional income exceeds ₹2.5 lakh or turnover/gross receipts exceed ₹25 lakh in any one of the three immediately preceding years. Similar expected-threshold rules apply to newly established businesses.
The records need to be sufficient to enable correct computation of taxable income.
Accordingly, a small salaried taxpayer with a few intraday transactions and a full-time trader may have very different bookkeeping requirements.
Never Put “Imaginary” Figures in the ITR-3 Balance Sheet
This is particularly important.
If ITR-3 requires balance-sheet information, do not invent cash-in-hand, capital or asset figures merely to make the balance sheet tally.
Use actual figures as at 31 March 2026, supported by records such as bank statements, broker ledgers and books.
Relevant balances can include business bank balance, genuine cash-in-hand, broker receivable/payable, trading inventory where applicable, fixed assets, loans and proprietor’s capital.
If ₹25,000 cash was not actually held, ₹25,000 should not be entered simply because it makes the balance sheet balance.
Proper accounting records should determine the capital figure—not the other way around.
When Is Tax Audit Required for a Trader?
For business taxpayers, Section 44AB generally prescribes tax audit where turnover exceeds ₹1 crore.
However, the threshold increases to ₹10 crore where both cash receipts and cash payments do not exceed 5% of the respective totals. Non-account-payee cheques/drafts are treated as cash for this test.
This means a trader with ₹2 crore of correctly calculated F&O turnover does not automatically require audit if the enhanced ₹10 crore condition is satisfied.
Other audit provisions, including presumptive-taxation consequences, should also be checked separately.
STT Is Not Always Non-Deductible
A major distinction is necessary here.
Where securities transactions constitute business income, Section 36(1)(xv) specifically permits deduction of Securities Transaction Tax paid on taxable securities transactions if the corresponding income is included under PGBP.
However, where shares are reported as capital gains, STT cannot be deducted while calculating capital gain.
So saying “STT is never deductible” is incorrect.
F&O Loss and Intraday Loss Carry Forward
F&O loss from eligible exchange-traded derivatives is generally a non-speculative business loss. Subject to the loss-return requirements, such business loss can generally be carried forward for up to eight assessment years.
Intraday equity loss is normally speculative. Speculation loss can generally be set off only against speculation profit and carried forward for four assessment years.
Also remember that a business loss cannot be set off against salary income in the same year.
To preserve carry-forward of business, speculation and capital losses covered by Section 139(3), the loss return generally needs to be filed within the applicable Section 139(1) due date.
ITR-3 Due Date for AY 2026-27
AY 2026-27 relates to FY 2025-26 and continues under the Income-tax Act, 1961.
For taxpayers having business/professional income whose accounts are not required to be audited, the due date is 31 August 2026. Audit cases generally have a 31 October due date, while Section 44AB requires the audit report one month before the applicable return due date.
If a business-income taxpayer wants to opt out of the default new tax regime and use the old regime, Form 10-IEA must generally be filed by the Section 139(1) due date.
Frequently Asked Questions
Is ITR-3 compulsory for F&O trading?
For an individual/HUF having taxable F&O business income or loss, ITR-3 is generally the appropriate form unless another specific statutory treatment applies.
Is F&O speculative income?
Eligible derivative transactions carried out on a recognised stock exchange are generally treated as non-speculative under Section 43(5).
Is intraday share trading speculative?
Equity transactions settled without delivery are ordinarily treated as speculative transactions.
Can I enter approximate cash in the ITR balance sheet?
Do not invent a figure. Report the genuine business cash balance supported by your records.
Is STT deductible from F&O income?
Where the relevant securities transactions are taxed as business income, Section 36(1)(xv) specifically allows qualifying STT deduction.
What is the ITR-3 due date for a non-audit trader in AY 2026-27?
The applicable due date is 31 August 2026 for a non-audit taxpayer whose total income includes business or professional income.
