How to Report Stock Market Gains in Your ITR: Equity, F&O, and Intraday

Stock market income comes in three fundamentally different legal categories, and each is reported differently in the income tax return. Delivery-based equity trades generate capital gains, taxed at flat rates under Section 111A or 112A. Futures and options trading generates non-speculative business income, declared in Schedule BP of ITR-3 alongside a profit and loss statement. Intraday equity trading generates speculative business income, also in ITR-3 but in a separate sub-head with its own loss carry-forward rules.

Many active traders and investors mix up these categories, put F&O income in the capital gains schedule, file ITR-2 when ITR-3 is required, or calculate F&O turnover incorrectly. Each of these errors leads to a defective return notice, a scrutiny assessment, or incorrect tax. This guide covers all three categories in the sequence that most investors encounter them: equity delivery trades first, then F&O, then intraday, with the reporting steps for each.

The guide is applicable for AY 2026-27, covering income earned in FY 2025-26. The tax rates and audit thresholds reflect the law as applicable for that assessment year.

The Three Categories and the Forms They Require

The first decision is recognising which category each of your activities falls into. The tax treatment is determined by the nature of the activity, not by how much profit or loss was made.

Activity	Tax Classification	ITR Form Required
Buying shares and holding for delivery (overnight or longer), then selling	Capital gains (STCG if held 12 months or less; LTCG if held more than 12 months)	ITR-2 (unless you also have F&O or intraday, in which case ITR-3)
Equity futures trading (Nifty futures, stock futures)	Non-speculative business income	ITR-3
Equity options trading (Nifty options, stock options, index options)	Non-speculative business income	ITR-3
Currency futures and commodity futures on recognised exchanges	Non-speculative business income	ITR-3
Intraday equity trading (buy and sell same-day without delivery)	Speculative business income	ITR-3
Holding F&O and delivery positions in the same year	Both capital gains and business income	ITR-3 (which accommodates both)

A common misconception is that a small number of F&O trades does not trigger the ITR-3 requirement. It does. Even one Nifty futures contract bought and sold in FY 2025-26 generates business income that must be reported in Schedule BP of ITR-3, not in Schedule CG. Filing ITR-2 for a year in which you had any F&O trades is a form mismatch that will produce a defective return notice.

Part 1: Reporting Equity Delivery Gains (Capital Gains)

Equity delivery gains from shares held overnight or longer are capital gains and are reported in Schedule CG of ITR-2 (or of ITR-3 if you also have F&O income). The reporting steps are the same regardless of which form you are filing.

For equity delivery trades, the source document is the capital gains statement or Tax P&L from your broker. Most Indian brokers, including Zerodha, HDFC Securities, ICICI Direct, Groww, Upstox, and others, provide an annual capital gains report that breaks down every sale into: purchase date, sale date, quantity, purchase price, sale price, STT paid, and the computed capital gain or loss, classified as STCG or LTCG.

Download this statement for FY 2025-26 (1 April 2025 to 31 March 2026) from your broker portal. Reconcile the totals with your Annual Information Statement (AIS) on the income tax portal. The AIS should show similar capital gains figures if your broker has reported correctly to the income tax department.

If you hold shares with multiple brokers, download a statement from each and consolidate the totals before entering in the ITR.

Entering Equity STCG in Schedule CG

Short-term capital gains from listed equity shares (held 12 months or less) are taxed at 20 percent under Section 111A. They are entered in Section A1 of Schedule CG.

Enter the aggregate STCG figure from your broker's statement. If you have STCG from multiple brokers, add them together and enter a single aggregate figure. The portal may ask for a quarterly break-up: use the transaction dates from the broker statement to allocate gains by quarter (Q1: April to June, Q2: July to September, Q3: October to December, Q4: January to March).

If you have STCG losses rather than gains (the total of your short-term sales was a net loss), enter the loss amount in the losses section. STCG losses can be set off against both STCG and LTCG from any capital asset in the same year.

Entering Equity LTCG in Schedule CG and Schedule 112A

Long-term capital gains from listed equity shares (held more than 12 months) are taxed at 12.5 percent above the Rs 1.25 lakh annual exemption under Section 112A. They are entered in Section B1 of Schedule CG.

Enter the full gross LTCG. The portal applies the Rs 1.25 lakh exemption automatically after all transactions are entered. Do not manually deduct the exemption before entering.

In addition to Section B1, you must also complete Schedule 112A, which requires stock-level detail. For each listed equity share from which you had long-term gains, enter: the ISIN code of the share (usually shown in the broker statement), the name of the company, the number of shares sold, the sale price per share, the purchase price per share, the fair market value per share as on 31 January 2018 (for shares purchased before 1 February 2018, for the grandfathering calculation), and the resulting LTCG.

Grandfathering applies to shares purchased before 1 February 2018. For such shares, the deemed cost of acquisition is the higher of the actual purchase price or the closing price on BSE or NSE on 31 January 2018. The broker's capital gains statement typically pre-applies grandfathering and shows the grandfathered cost as the purchase price. If your statement does not show it, you need to look up the historical closing price for 31 January 2018 from BSE or NSE historical data.

Schedule 112A requires stock-by-stock detail for every equity LTCG position. Entering only the total in Section B1 without completing Schedule 112A is an incomplete return. Both sections must be filled.

Part 2: Reporting Futures and Options Income (Non-Speculative Business Income)

F&O income is business income and is reported in Schedule BP (Business and Profession) of ITR-3. It is categorised as non-speculative business income under Section 43(5), meaning it can be set off against a wider range of other income than speculative (intraday) losses.

One of the most misunderstood and most consequential aspects of F&O taxation is the definition of turnover for F&O trading. This number determines whether a tax audit is required, and errors in its calculation are among the top causes of incorrect ITR-3 filings.

F&O turnover is not the total value of contracts traded. It is the absolute sum of all profits and losses from F&O trades, computed position by position. In other words, if you made a profit of Rs 50,000 on one futures trade and a loss of Rs 30,000 on another, your F&O turnover is Rs 50,000 plus Rs 30,000 equals Rs 80,000, not Rs 20,000 (the net profit), and not the total value of the contracts.

For options specifically, the ICAI (Institute of Chartered Accountants of India) has clarified in its guidance note (updated August 2022) that turnover for options includes the absolute value of premium received and paid on options, in addition to the absolute value of profits and losses from option trades. Under the updated guidance, the turnover for options is typically lower than under the older method, which previously included the full contract notional value. Using the correct post-2022 guidance reduces computed turnover significantly for many options traders.

Your broker's Tax P&L report typically shows turnover computed under the current method. Zerodha, Upstox, Groww, and most major brokers provide a turnover figure in their annual tax reports. Verify which methodology your broker has used before relying on the figure.

Instrument	Turnover Calculation Method	Example
Equity futures	Absolute value of all profits and losses (favourable and adverse) on individual contract positions	Profit of Rs 40,000 on one contract, loss of Rs 25,000 on another: turnover = Rs 65,000
Equity options (Index options, stock options)	Absolute value of all profits and losses plus premium received and paid	Premium received Rs 15,000, loss on option Rs 8,000: turnover includes both components (updated ICAI method)
Currency futures	Absolute value of all profits and losses	Same as equity futures methodology

Whether a tax audit under Section 44AB is required depends on the computed F&O turnover and the income declared.

For traders who transact entirely digitally (bank payments, digital settlements), the higher threshold of Rs 10 crore applies: if F&O turnover is below Rs 10 crore, no audit is required, provided at least 95 percent of all receipts and at least 95 percent of all payments are through banking channels. Since virtually all F&O settlement is electronic, most retail traders qualify for this higher threshold.

For traders with any significant cash component in receipts or payments (more than 5 percent), the lower threshold of Rs 1 crore applies. Exceeding this requires a tax audit.

There is also a provision-specific trigger: if you previously opted for the presumptive taxation scheme under Section 44AD in any of the five immediately preceding assessment years and now wish to declare income below the prescribed presumptive rate, or if you incur a loss, a tax audit is mandatory regardless of turnover. This is an important trap for traders who experimented with presumptive taxation in an earlier year and then switched back to normal business income reporting.

Condition	Audit Required?	Applicable Threshold
F&O turnover below Rs 10 crore, 95%+ digital transactions	No audit required	Higher Rs 10 crore threshold for digital traders
F&O turnover above Rs 10 crore (digital)	Audit mandatory	Section 44AB
F&O turnover below Rs 1 crore but cash transactions above 5%	Audit mandatory	Lower Rs 1 crore threshold applies
Previously opted for Section 44AD presumptive scheme, now declaring a loss	Audit mandatory regardless of turnover	Section 44AB(e) override
Net income from F&O exceeds Rs 50 lakh (Section 44AD condition)	Presumptive scheme not applicable; normal books required	Must file with regular P&L, not presumptive

If a tax audit is required, the CA's report must be filed by 30 September 2026, and the ITR-3 must be filed by 31 October 2026. If no audit is required, the ITR-3 filing deadline for FY 2025-26 is 31 August 2026 (extended from the usual 31 July by Budget 2026 for non-audit business cases).

In ITR-3, F&O income is reported in Schedule BP under the head Profits and Gains from Business or Profession. Navigate to Schedule BP and look for the section for speculative and non-speculative business income. F&O is non-speculative.

The inputs required are: gross receipts or turnover (the F&O turnover computed as described above), business expenses deductible against F&O income, and the net profit or loss. Allowable business expenses for F&O traders include: brokerage paid to the broker, SEBI turnover fee, STT paid on options (STT on futures is also deductible as a business expense), internet and software charges related to trading, and other direct expenses. Standard TDS on salary and wages, depreciation on trading hardware, and other genuine business costs are also deductible.

Your broker's annual brokerage and charges statement will show the total STT, exchange fees, and brokerage you paid during the year. These are deductible from F&O turnover income to arrive at the net profit or loss.

Schedule BP also requires you to enter the business code for F&O trading. The commonly used code for derivative trading is 09028 (Dealing in derivatives) or similar codes as shown in the ITR-3 instructions. Verify the current code in the AY 2026-27 ITR-3 instructions.

F&O losses are non-speculative business losses and can be set off against income from almost any other head, including salary, house property income, and other business income. However, they cannot be set off against speculative income (intraday gains). If the loss is not fully set off in the current year, it can be carried forward for 8 years and set off against any non-speculative business income in those future years. The carry-forward requires ITR-3 to be filed by the due date.

Part 3: Reporting Intraday Equity Trading (Speculative Business Income)

Intraday equity trading, where shares are bought and sold within the same trading day without taking delivery, is classified as speculative business income under Section 43(5) of the Income Tax Act. It is reported in a different section of Schedule BP from F&O income, with different loss set-off rules.

For intraday equity trading, turnover is calculated differently from F&O. Intraday turnover is the absolute sum of all positive and negative net differences arising from all intraday trades during the year. Since no delivery is taken, each intraday trade results in a net profit or loss (the difference between buy and sell price multiplied by quantity). The turnover is the sum of the absolute values of all these net differences.

For example, if on Day 1 you made a net profit of Rs 3,000 from an intraday trade, and on Day 2 a net loss of Rs 1,500, and on Day 3 a net profit of Rs 800, your intraday turnover is Rs 3,000 plus Rs 1,500 plus Rs 800 equals Rs 5,300. The gross contract value is irrelevant to the turnover calculation for speculative business.

In Schedule BP of ITR-3, look for the section that specifically handles speculative business income. Intraday trading income is separate from F&O income within the same schedule. Enter the gross speculative income (total intraday profits), the speculative losses in the same year, the allowable business expenses against intraday trading, and the net speculative income or loss.

Business expenses deductible against intraday trading income include brokerage, STT, exchange charges, and other direct trading costs.

The loss set-off rules for speculative income are more restrictive than for F&O. Speculative losses can only be set off against speculative income. A net speculative loss cannot reduce salary income, F&O income, or any other non-speculative income. This is the key practical difference between having an intraday loss and an F&O loss.

Speculative losses can be carried forward for 4 years, after which they expire. During those 4 years, the loss can only be set off against speculative profits in future years. Carry-forward requires filing ITR-3 by the due date.

Loss Type	Can Set Off Against	Carry-Forward Period	Carry Forward Against
F&O loss (non-speculative)	All income heads except salary in the same year (including capital gains, house property, other business income); cannot be set off against speculative income	8 years	Non-speculative business income only
Intraday loss (speculative)	Speculative income only in the same year	4 years	Speculative income only
Equity STCG loss	Both STCG and LTCG from capital assets	8 years	Capital gains (both STCG and LTCG)
Equity LTCG loss	LTCG only from capital assets	8 years	LTCG only

An investor who had delivery-based stock gains, F&O trading, and intraday activity in FY 2025-26 must file ITR-3 and report all three types of income in the same return.

In Schedule CG, enter the delivery-based equity capital gains exactly as described in Part 1. In Schedule BP, enter the F&O business income under the non-speculative sub-head and the intraday income under the speculative sub-head. The portal will compute the net income from each category and consolidate the total taxable income.

The interaction between the three categories in terms of set-off is important to understand.

• F&O loss can be set off against equity delivery STCG and LTCG in the same year. This is because F&O is a non-speculative loss that can be set off against capital gains.

• Intraday loss cannot be set off against delivery-based capital gains or F&O income. It can only offset speculative gains.

• Equity STCG or LTCG losses cannot be set off against F&O income or intraday income. Capital gains losses can only be set off against capital gains.

Getting these set-off rules right is one of the more technically complex aspects of tax filing for active traders, and a chartered accountant who is familiar with derivative taxation is particularly useful for investors who have all three income types in the same year with significant amounts in each.

F&O trading is a business, and business income requires books of account. The income tax law mandates that individuals carrying on a business maintain books if their income from the business exceeds Rs 2.5 lakh or if their gross receipts exceed Rs 25 lakh in any of the three immediately preceding years.

For F&O traders, this threshold is easily crossed even with moderate activity. Books of account for a retail F&O trader do not require complex accounting software. The minimum required is: a daily trade log (available from your broker), a record of all expenses incurred in connection with trading, and a profit and loss statement for the year. For most retail traders, the broker's annual Tax P&L report and brokerage statement serve as the primary books.

If a tax audit is required, the CA will base their report on these records. Maintaining clean, complete records from the start of the year makes the audit process far less burdensome than reconstructing transactions after the fact.

For stocks and F&O both, the primary source document is the broker's Tax P&L or annual statement. Most brokers provide this for the full financial year. Key data points to extract and use in the ITR.

• Delivery-based equity: Stock-by-stock capital gains statement with purchase date, sale date, purchase price, sale price, gain or loss, STCG or LTCG classification, and grandfathered cost for pre-2018 holdings.

• F&O turnover: The absolute sum of profits and losses across all F&O trades, computed per the current ICAI guidance. Most brokers provide this as a separate figure in their tax report.

• Intraday turnover: The absolute sum of net profits and losses from intraday trades.

• STT and brokerage paid: Deductible as business expenses against F&O and intraday income.

• Exchange transaction charges, SEBI fees, and other statutory charges: Also deductible as business expenses.

Some third-party platforms such as Quicko, Cleartax, and others offer import of broker data directly from Zerodha, HDFC Securities, and other major brokers. These platforms automate the classification and entry process. If you use such a platform, verify that it has correctly categorised your trades into delivery, F&O, and intraday before relying on its output for ITR filing.

Common Mistakes When Reporting Stock Market Income

• Filing ITR-2 when F&O or intraday trades were also executed: Any F&O or intraday activity requires ITR-3. Filing ITR-2 is a form mismatch that leads to a defective return notice.

• Reporting F&O income in Schedule CG instead of Schedule BP: F&O income is business income, not capital gains. Placing it in the capital gains schedule results in incorrect tax computation and a classification error.

• Using net P&L as F&O turnover instead of the absolute sum: Turnover is not profit minus loss. It is profit absolute value plus loss absolute value. Underreporting turnover can affect tax audit determination and may trigger scrutiny.

• Forgetting to deduct STT and brokerage as business expenses: These are legitimate deductions against F&O and intraday income. Forgetting them increases the reported net profit unnecessarily.

• Treating intraday losses as F&O losses and setting them off against salary: Intraday (speculative) losses cannot offset any income except speculative gains. Only F&O (non-speculative) losses can be set off against salary in the same year.

• Not completing Schedule 112A for equity LTCG: The aggregate LTCG in Section B1 must be accompanied by stock-level detail in Schedule 112A. Completing one without the other is an incomplete return.

• Missing the ITR-3 deadline and losing F&O or intraday loss carry-forward rights: The deadline for non-audit ITR-3 filers is 31 August 2026 for AY 2026-27. Missing this forfeits the ability to carry forward F&O and intraday losses.

• Not accounting for the grandfathering rule for shares bought before 1 February 2018: Using only the original purchase price without applying the January 2018 grandfathering adjustment will overstate LTCG and result in excess tax.

Disclaimer: This article is for educational purposes only and does not constitute tax or financial advice. Tax rates, turnover calculation methods, audit thresholds, and set-off rules are based on the Income Tax Act, 1961 as applicable for AY 2026-27 and the ICAI guidance note as of June 2026. Rules are subject to CBDT notifications and circulars. F&O taxation is a complex area with case-specific nuances; investors with significant F&O activity should consult a qualified chartered accountant before filing.