How to report intraday speculative income in ITR-3

Intraday equity trading, buying and selling the same share on the same trading day without taking delivery, is classified as a speculative transaction under section 43(5) of the Income Tax Act 1961. The income or loss from intraday trading is treated as speculative business income, which must be reported in ITR-3. This guide covers the end-to-end procedure for declaring intraday income using data from Zerodha Console.

Legal basis

Section 43(5) defines a speculative transaction as a contract that is settled otherwise than by actual delivery. Intraday equity trades are squared off on the same day without delivery of shares; they therefore fall squarely within the definition. Unlike F&O trades, there is no exception in the proviso to section 43(5) for intraday equity trades. The result is that:

• Intraday equity profits are speculative business income taxable at slab rates.
• Intraday equity losses are speculative losses with restricted set-off rights.
• The applicable ITR form is ITR-3 (not ITR-2, which does not have a speculative business income schedule).

Speculative vs non-speculative: key differences

Prerequisites

• The Tax P&L statement from Zerodha Console showing the intraday equity section.
• A record of charges attributable to intraday trading.
• The ITR-3 offline utility from incometax.gov.in.
• If you also have F&O trades, the F&O Tax P&L for the same year.

Step-by-step procedure

Step 1: Download the intraday Tax P&L from Console

Log in to console.zerodha.com. Navigate to Reports → Tax P&L and select the financial year 2024-25. The page shows the intraday equity section separately, with:

• Realised P&L: net profit or loss from all intraday equity trades in the financial year.
• Turnover: computed as the absolute sum of all intraday profits and losses.
• Number of trades.
• Charges: STT, brokerage, exchange charges, GST attributable to intraday trades.

Download the intraday trade-level CSV for verification.

Step 2: Compute intraday turnover

For the purpose of section 44AB (tax audit threshold), intraday equity turnover is computed as:

Turnover = Sum of |Profit or Loss on each intraday trade|

This is the same absolute-profit method used for F&O turnover. Do not use the gross value of buy or sell transactions. The Zerodha Tax P&L shows this turnover figure. Verify it against the CSV.

Important: for determining the section 44AB audit threshold, you must combine intraday equity turnover with F&O turnover and any other business turnover. The threshold is applied to total business turnover, not segment-wise.

Step 3: Identify allowable expenses (old tax regime)

Under the old tax regime, expenses directly attributable to intraday trading are deductible:

• Brokerage: Zerodha charges Rs 20 per executed intraday order.
• STT: charged on the sell leg of intraday trades at 0.025% of the sell turnover (gross, not P&L).
• Exchange transaction charges: NSE/BSE per-contract levy.
• SEBI fees and stamp duty: from the charges summary.
• GST on brokerage and charges: 18% on brokerage.
• Internet and data: proportionate to intraday use.

Under the new tax regime (default from AY 2025-26), these deductions are generally not available. Compute tax under both regimes and choose the lower-liability option after consulting a CA.

Step 4: Compute net speculative income

Net speculative income = Intraday realised P&L - Allowable expenses

If the result is positive, it is speculative income taxable at slab rates. If the result is negative, it is a speculative loss subject to restricted set-off and carry-forward rules.

Step 5: Apply loss set-off rules (if applicable)

If the net result is a speculative loss:

• Current year set-off: the speculative loss can only be set off against speculative income in the same financial year. It cannot be set off against F&O income, salary, capital gains, or any other head.
• Carry-forward: if no speculative income exists to absorb the loss, the unapplied speculative loss is carried forward under section 73 for a maximum of four assessment years (not eight).
• Filing on time: the carry-forward is allowed only if the original return is filed on or before the due date (31 July for non-audit cases).

If the net result is a speculative gain:

• Any brought-forward speculative losses from prior years (Schedule BFLA) can be set off against the current speculative gain.

Step 6: File ITR-3 and populate Schedule BP

In the ITR-3 offline utility:

1. Navigate to Schedule BP (Business and Profession).
2. Locate the sub-section for speculative income. It may be labelled Net profit from speculative business or similar.
3. Enter the net speculative income (profit) or net speculative loss.
4. If you also have F&O income, enter it in the separate non-speculative sub-section of Schedule BP.

The utility keeps speculative and non-speculative income separate throughout the return.

Step 7: Handle carried-forward speculative losses from prior years

If you filed ITR-3 in a prior year with a carried-forward speculative loss, the Schedule BFLA in the current ITR-3 allows you to set it off against the current year’s speculative income. The ITR-3 utility prompts you to enter brought-forward losses from Schedule CFL of the prior year’s return. Ensure the prior year’s ITR-V acknowledgement is available to substantiate the carry-forward.

Step 8: Complete the return and e-verify

After populating Schedule BP, follow the general ITR-3 filing procedure described in How to file ITR-3 with Zerodha F&O turnover: populate Schedule CG (if capital gains exist), complete Schedule VIA (deductions, old regime), compute tax, pay self-assessment tax if due, upload, and e-verify.

Special situations

Intraday volume large enough to be treated as a business by the Assessing Officer

The Income Tax Department has in some assessments treated very high-volume equity delivery trading as business income rather than capital gains, re-characterising capital gains as business income. For intraday trading, this risk does not arise because the classification as speculative business income is already the default under section 43(5). However, the distinction between intraday (speculative) and delivery (capital gains) can become blurred if the taxpayer frequently converts intraday positions to delivery. Always confirm with a CA how to classify such positions.

Intraday trading in equity derivatives vs equity shares

Be careful: intraday trading in equity shares is speculative under section 43(5). But intraday trading in equity derivatives (futures and options) is non-speculative under section 43(5) proviso (iv), even if the position is squared off within the day. Zerodha’s Tax P&L segregates these correctly, but verify the classification if you trade both.

What can go wrong

Filing ITR-2 with intraday income: ITR-2 does not have a speculative business income schedule. Using ITR-2 when you have intraday income makes the return defective.

Setting off speculative loss against F&O income: This is not allowed. Speculative losses can only be set off against speculative gains. Incorrectly applying them against F&O income may lead to a notice.

Forgetting the intraday section in the Tax P&L: The Zerodha Tax P&L page has separate cards for equity delivery, equity intraday, and F&O. Traders sometimes download only the capital gains CSV and miss the intraday section.

Losing carry-forward by filing late: A belated return forfeits the speculative loss carry-forward. File on time.

Related guides

• How to declare F&O as business income
• How to file ITR-3 with Zerodha F&O turnover
• How to download the Tax P&L statement from Zerodha Console
• How to compute turnover for F&O audit
• F&O taxation in India

References

1. Income Tax Act 1961, section 43(5), definition of speculative transaction; no exclusion for intraday equity.
2. Income Tax Act 1961, section 73, carry-forward and set-off of speculative losses (4 years).
3. Income Tax Act 1961, section 72, carry-forward and set-off of non-speculative business losses (8 years).
4. Income Tax Act 1961, section 44AB, tax audit threshold; combined business turnover applies.
5. Finance Act 2024, revised STCG and LTCG rates; new tax regime as default from AY 2025-26.
6. Zerodha Console Tax P&L documentation, console.zerodha.com/reports/tax-pnl.