Loss in option trading

1. As per clause d of proviso to Sec 43(5), 

"an eligible transaction in respect of trading in derivatives referred to in clause [(ac)] of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised stock exchange;

Hence, loss of Rs. 8 lacs is non-speculative loss which can be carry forward for 8 Asst Years and can be set off against income under the head PGBP (irrespective of its nature being speculative/ non-speculative)

On the other hand, intra-day loss of Rs. 2 lac is speculative loss and can be carried forward for 4 Asst Years and can be set off against ONLY SPECULATIVE INCOME.

2. You need to file ITR-4.

3. No documents is required to be submitted as per Rule 12(2). However, the AO may ask for contract notes, if your files goes into scrutiny. So maintain all the contract notes properly until the assessment is done.

P      

I do not agree with Sonam's 1st point.

The loss from trading in Derivatives of Rs.8 Lakhs as well as Intra-day Loss of Rs. 2 Lakhs from trading in Equity both are Speculative in Nature. Hence cannot be set-off against Salary Income.

You can ofcourse carry forward the Loss upto next 4 Assessment years.