Tax Rules for Intraday Trading Income in India

How are gains from intraday trading taxed for ITR purposes?

Gains from intraday trading are treated as speculative business income, not capital gains.

Tax Treatment:

- Profits are added to your total taxable income and taxed as per your income tax slab rate.
- You can deduct expenses directly related to trading, such as brokerage fees, internet charges, and other costs.

Losses:

- Intraday trading losses are called speculative losses.
- These can be set off only against other speculative business income.
- If not adjusted in the same year, they can be carried forward for up to 4 years to set off against future speculative gains.

ITR Filing:

Report intraday trading income under the “Profit & Gains from Business and Profession” section of your return.

Generally, you need to file ITR-3.

A tax audit may be required if your turnover exceeds 1 crore (for business other than presumptive taxation) or if you declare profits below the prescribed rate under presumptive taxation rules. (Section 44AD).

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