Futures and options taxation in India

Sat, 16 May 2026 00:00:00 +0000

Futures and options taxation in India is governed by the Income Tax Act, 1961 , with the core classification provided by Section 43(5)(d), which treats eligible derivative transactions on recognised stock exchanges as non-speculative business income rather than as speculative income or as capital gains. The classification is the structural foundation of the F&O tax framework and has consequential implications across the entire computation: profits and losses are computed as business income, are aggregated with other business income, are reported in ITR-3 , are subject to the Section 44AB tax audit thresholds, are eligible for the Section 44AD presumptive taxation option (subject to turnover limits), and produce business losses that can be set off against other heads of income (other than salary) and carried forward for 8 years.

Non-Speculative Business Income on WebNotes

Futures and options taxation in India