Option Intraday trade & its turnover calculations reporting in ITR.

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This discussion clarifies the tax treatment of intraday options trades, specifically for equity and currency derivatives. It confirms that these trades should be reported under 'Income from Business & Profession' in ITR 3, not as speculative business. The turnover calculation for currency options involves only the profit and loss figures, not the total buy and sell values. The tax treatment for equity and currency options is the same.

rmalhotra

rmalhotra (Querist)
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21 December 2023 Sir,

Here is specific and pin pointed queries of Option Intraday Trades & related issues.
In fact Institute guidelines issued in
Aug 2022 details method of calculating turnover in Future & Option trade. and states that it needs to be treated under head " Income from Business & Profession ". But could not find clarification on following points pinpointedly. In guidelines only reference is of " Future & Option " but not of Intraday trade within "
future & Options which is extended up to expiry date of contract where as Intraday trade of " Options (Equity & Currency ) is squared off on that day itself. Hence following queries :-

1 Is Intraday Trade in OPTIONS (Equity or Currency ), is also to be treaded under same head of " Business & Profession " and is required to be reported in ITR 3. ?
OR
2. Intraday trade of OPTIONS ( Equity or Currency derivatives ) is to be treated as " "Speculative " business as nature of trade is to close the trade in short time and close it by expiry time of only that day itself as it is " Intraday Trade only ".?

3. In currency trade , how is turnover to be calculated. Is it total of Buy & Sell absolute values ( i.e of total transaction amount as it is currency trade ) OR is it total of absolute figures of only Profit & Loss figures ( i.e. Profit & Loss figures only ). ?

4 Does treatment in case of Option (Equity derivatives ) trade differs from that of Currency Option trade ?

Pls guide on above points .