Intraday Trading Tax Treatment in India 2026
Most intraday traders overlook the tax implications of their trades, until they receive a tax notice. Intraday trading has a distinct tax treatment under Indian income tax law that is very different from long-term investing. Here is everything you need to know.
How Intraday Gains Are Classified
Under the Income Tax Act 2025 (formerly the Income Tax Act, 1961), income from intraday equity trading is classified as speculative business income. This applies to all buy-and-sell transactions in equity shares on a recognised exchange where no actual delivery of shares occurs.
Tax Rate on Intraday Profits
Speculative business income is taxed at your applicable income tax slab rate, not a flat rate. If your total income (salary + intraday profits + other income) is Rs.15 lakh, your intraday profits are taxed at 20% or 30% depending on the bracket.
“Start investing with confidence! Explore
0 demat account
and grow your wealth.”
Comparison: Intraday vs F&O vs Delivery
| Income Type | Classification | Tax Rate | Set-Off Rules |
|---|---|---|---|
| Intraday equity trading | Speculative business income | Income tax slab rate | Only against other speculative income |
| F&O trading | Non-speculative business income | Income tax slab rate | Against most other income |
| Equity delivery < 1 year | Short-term capital gains (STCG) | 20% flat | Against STCG and LTCG |
| Equity delivery > 1 year | Long-term capital gains (LTCG) | 12.5% above Rs.1.25 lakh | Only against LTCG |
The Critical Loss Set-Off Rule
Speculative losses (intraday losses) can ONLY be set off against speculative income (other intraday profits). They CANNOT be set off against salary income, F&O income, or capital gains. This is the most important difference between intraday losses and F&O losses; F&O losses can be set off against most other income types.
Which ITR Form for Intraday Traders?
If you do intraday trading in any financial year, you must file ITR-3, which is the form for individuals with business income. You cannot file ITR-1 (Sahaj) or ITR-2 even if your intraday activity was minimal. Failure to use the correct form can result in a defective return notice from the Income Tax Department.
Turnover Calculation for Intraday Trading
For intraday trades, turnover is calculated as the ABSOLUTE sum of all profits and losses (not the total transaction value). Example: You make Rs.2,000 profit on Trade A and Rs.1,500 loss on Trade B. Turnover = Rs.2,000 + Rs.1,500 = Rs.3,500. This distinction matters for determining whether a tax audit is required.
Expenses Intraday Traders Can Claim
- Brokerage charges (zero on Lemonn but applicable if using other brokers)
- Securities Transaction Tax (STT) paid on intraday trades
- Exchange transaction charges, SEBI fees, GST on brokerage
- Internet and data plan costs used for trading
- Stock market data subscription fees (NSE live feed, Bloomberg terminal, etc.)
- Depreciation on computer, trading workstation, and accessories
Is Tax Audit Required for Intraday Traders?
Tax audit under Section 44AB is required if your total business turnover (including intraday turnover as calculated above) exceeds Rs.10 crore in the financial year. However, if your taxable income exceeds the basic exemption limit and your declared profit is less than 6% of turnover, audit may also be triggered. Consult a CA if your trading is significant.
FAQs
Can I show intraday losses to reduce my salary tax?
No. Speculative losses can only be set off against speculative income, not salary. However, you can carry forward intraday losses for up to 4 years to offset future intraday profits, but you must file your ITR on time.
Do I need to report intraday trading even if I made a loss?
Yes. If you did any intraday trading in the year, you must report it in ITR-3 even if the net result is a loss. This is important to preserve your carry-forward loss benefit.
What is the due date for ITR-3 for intraday traders?
July 31 of the assessment year if no tax audit is required. If audit is required, the deadline extends to October 31.
Is STT paid on intraday trades deductible?
Yes, STT is a deductible business expense for intraday traders since their income is classified as business income.
What documents should I keep for intraday tax filing?
Your broker’s annual P&L statement, contract notes for all trades, and bank statements showing trading account transfers. Lemonn provides a downloadable annual P&L report from the app.
Disclaimer
The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Lemonn (Formerly known as NU Investors Technologies Pvt. Ltd) do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
Related Posts
Download Lemonn
Download my app for share market trading, ipo investment, trading account, and all your investment needs.
