What is F&O Trading Tax?

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F&O trading tax refers to the tax regulations applied to income generated from trading in futures and options in the financial markets, here are some things to know.

1

Tax Classification

Income from F&O trading is classified as "business income" under the Income Tax Act of India.

2

Tax Rates

For individuals, this follows the progressive tax slabs ranging from 0% to 30%, based on the total income.

3

Tax Audit

The turnover from F&O trading exceeds ₹1 crore, or if the income is  less than 6% of the turnover and the total income exceeds the basic exemption limit.

4

Turnover Calculation

This includes the sum of the positive and negative differences from the trades during the financial year.

5

Deductible Expenses

Expenses directly related to the F&O trading business, such as brokerage fees, internet charges, and other operational costs.

6

Advance Tax

F&O traders must pay advance tax if their total tax liability exceeds ₹10,000 in a financial year.

7

Filing Requirements

Income from F&O trading must be reported in the Income Tax Return (ITR) under the head "Income from Business or Profession."