- Intraday trading is treated as a speculative business under Indian tax law.
- You must report profits/losses in the ITR-3 form, not ITR-1 or ITR-2.
- Maintain books of accounts, audit may apply if turnover > ₹10 crore (with digital receipts) or profit < 6%.
- Avoid penalties by declaring even small losses and filing on time.
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Confused about how to report intraday trading income in your tax returns?
You’re not alone. Most traders either under-report profits or miss out on claiming losses—leading to notices, penalties, or missed tax-saving opportunities.
In this expert-backed guide, we’ll show you exactly how to report intraday profits and losses as per Indian income tax rules in 2025. Whether you're a beginner or intermediate trader, this is the clarity you've been searching for.
1. How Is Intraday Trading Income Classified?
According to the Income Tax Act, intraday trading is classified as speculative business income. Why?
- Because there is no delivery of shares — buy and sell happens within the same day.
- It involves high risk, uncertainty, and speculation.
This means it’s treated differently from salary, capital gains, or delivery-based investments—and must be reported under “Income from Business or Profession”.
2. Which ITR Form Should Intraday Traders Use?
✅ Use ITR-3 if you earn from intraday/speculative trading.
- ITR-1/ITR-2: Not valid if you have any business income.
- ITR-4: Not valid unless you opt for presumptive income (not allowed for speculative trading).
💡 Tip: File ITR-3 with accurate profit & turnover data. Use a CA or reliable tax filing platform that supports trader reporting.
3. How to Calculate Turnover for Intraday Trading?
Turnover is calculated as the absolute value of profits and losses from all trades.
Example:
- Trade 1: ₹2,000 profit
- Trade 2: ₹1,500 loss
- Total turnover: ₹3,500
⚠️ Don’t confuse turnover with contract value or trade volume. It’s based on P&L totals (absolute).
4. When Is Tax Audit Mandatory for Intraday Traders?
As per Section 44AB, tax audit is required if:
- Your intraday turnover exceeds ₹10 crore (digital >95%), OR
- Your profit is <6% of turnover and your income exceeds basic exemption limit (₹2.5L or ₹3L based on age).
Important: If you report low profit or a loss, and turnover exceeds ₹10 lakh, consult a CA.
5. Step-by-Step: Reporting Intraday Trading in ITR
- Use ITR-3 form → Section “No Account Case” (if books not maintained).
- Report turnover under “Speculative Business Income”.
- Mention net profit or loss amount.
- Declare other income (salary, rent, capital gains, etc.) separately.
- Pay advance tax or self-assessment tax if required.
- Include books/audit details if applicable.
📌 Attach P&L statement or ledger (from your broker) as proof if asked.
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Join the ₹499 Course – Save Taxes, Trade SmartCommon Mistakes to Avoid
- Using ITR-1 or ITR-2 for trading income.
- Not reporting small intraday losses (you lose the chance to carry forward).
- Confusing turnover with trade volume.
- Missing audit deadline when profit is low.
- Not maintaining any P&L or broker statements.
Pro Tips for Tax-Smart Traders
- Always reconcile broker statements with your bank account.
- Set alerts for advance tax deadlines: 15th Jun, Sep, Dec, and Mar.
- Use tools like [Link to Break-Even Calculator] or [Link to Position Size Calculator] for efficiency.
- Work with a CA experienced in trading taxation (not general CA).
- Use losses strategically—carry forward for 4 years (speculative).
FAQs: Intraday Trading Income Reporting in India
1. Do I need to file ITR if I have losses in intraday trading?
Yes. You should still file to claim and carry forward your losses.
2. Can I file intraday trading under capital gains?
No. Intraday must be declared as speculative business income under ITR-3.
3. Is audit mandatory if I have losses?
Only if your turnover is > ₹10 lakh and profit < 6% of turnover + income > exemption limit.
4. Can salaried people file ITR-3 for trading?
Yes. Salaried individuals with business income (like trading) can and should use ITR-3.
5. What happens if I don’t report trading income?
You may receive a tax notice under section 139(9) or 148. Penalties and interest may apply.
6. Can I carry forward intraday losses?
Yes, for 4 years. But only if reported in your ITR on time.
7. Do I need a CA to file ITR for trading?
It’s not compulsory, but highly recommended if turnover is high or if audit applies.
8. What proof do I need to show trading income?
Broker contract notes, P&L statement, trade book, and bank statements.
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