If you trade intraday in India, taxation is not optional and it’s not the same as capital gains. The Income Tax department treats intraday equity trading as speculative business income — a category with its own rules, forms, and audit thresholds.
This guide is intentionally non-jargon. For your filing, always confirm with a CA.
The single most important fact
Intraday equity trading P&L is speculative business income, not capital gains.
- It is not taxed at the STCG 15% rate (that’s for delivery trades held under 1 year).
- It is added to your total income and taxed at your slab rate.
- It cannot be offset against salary or normal business income.
- Losses can only be set off against other speculative income and carried forward 4 years.
Get this wrong and your ITR is wrong.
How profit is computed
Total turnover for intraday is calculated differently from a normal business. The Income Tax department considers:
- Absolute value of profit + absolute value of loss = turnover.
- Example: Trade 1 profit ₹3,000, Trade 2 loss ₹2,000 → turnover = ₹5,000, net P&L = ₹1,000.
This matters because the audit threshold depends on turnover.
Audit thresholds (2026)
Tax audit under section 44AB applies if:
- Turnover > ₹10 crore (with > 95% digital transactions — which intraday is by definition), OR
- Turnover ≤ ₹10 crore but profit declared is < 6% of turnover and total income exceeds the basic exemption limit.
In practice, most retail intraday traders fall into the second bucket the moment they have a loss year. Read this carefully with your CA.
Which ITR form?
- Intraday-only: ITR-3 (income from business / profession).
- Intraday + salary + capital gains: still ITR-3.
- Delivery-only (no intraday): ITR-2.
Expenses you can deduct
Speculative business income lets you deduct expenses incurred to earn it:
- Brokerage and STT (note: STT on intraday is reduced — check current rates).
- Internet, data subscriptions.
- Trading software, screener subscriptions, AI tools (yes, AI screener subscriptions are deductible).
- Depreciation on your trading laptop (if proportionate).
You cannot deduct: personal expenses, home loan EMI, etc.
Loss treatment (the part nobody understands)
Intraday losses are speculative losses.
- Can be set off only against speculative gains in the same year.
- Cannot be set off against salary, F&O profits, or capital gains.
- Unutilised loss is carried forward for 4 assessment years.
- To carry forward, you must file ITR before the due date.
This is why CAs nag you about timely filing — late filing kills loss carry-forward.
F&O vs intraday equity
| Intraday equity | F&O (futures + options) | |
|---|---|---|
| Classification | Speculative business | Non-speculative business |
| Set off against salary? | No | Yes |
| Carry forward losses | 4 years (speculative only) | 8 years (any business income) |
| Tax rate | Slab | Slab |
| ITR form | ITR-3 | ITR-3 |
The non-speculative treatment of F&O is one reason many serious Indian traders move from cash intraday to F&O — purely for tax efficiency.
STT and other charges
Intraday STT is charged only on the sell leg (delivery is both legs at a higher rate). You’ll also pay:
- Brokerage (often flat ₹20 / order with discount brokers).
- Exchange transaction charges.
- GST on (brokerage + transaction charges).
- SEBI charges.
- Stamp duty (on buy leg, since 2020 unified regime).
The total cost per round-trip on Nifty 100 stocks ranges roughly ₹40 – ₹80, depending on broker and size. Factor this into expected R-multiple.
Common mistakes
- Filing ITR-2 with intraday income. Wrong form; gets a notice.
- Mixing F&O and intraday turnover. They are computed differently.
- Not maintaining books. If your turnover or income crosses certain limits, books are mandatory (sec 44AA).
- Treating intraday loss like STCG loss. Wrong basket; can’t offset against delivery STCG.
- Skipping advance tax. Speculative income is regular income → advance tax is due quarterly.
A simple workflow for the year
- Download the P&L statement + tax P&L from your broker (Zerodha Console, Groww reports, etc.).
- Separate intraday equity, delivery equity, and F&O numbers.
- Track expenses monthly — keep receipts.
- Pay advance tax in June, September, December, March (or the safe-harbour 12% if income is uncertain).
- File ITR-3 before the due date.
For the margin and capital backdrop, see intraday margin rules in India. For whether intraday vs delivery makes sense for your situation, read intraday vs delivery trading in India.
Disclaimer
This is a general overview. Tax rules change every Finance Act and your situation has its own facts. Always run your specific return by a qualified CA. Read the IntradayEdge disclaimer.
FAQs
Is presumptive tax (sec 44AD) available for intraday? No. Speculative business is explicitly excluded from 44AD.
Can I claim home office expense? Proportionate, yes — rent / electricity / internet split. Document it.
What if I only had losses? File ITR-3 before the due date to carry forward. Skip filing, lose the loss.