Salaried person- how to deal f&o losses

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This query is : Resolved

Amit Arora (Querist)

18 August 2015 While filing I have the following heads of income -
1. Salary = Approx Rs. 6.00 Lac (I have a TDS certificate).
2. Savings bank account interest = Rs. 20,000
3. Capital gains from shares held for less than 1 year = Rs. 5,000
4. F&O losses. (Total Turnover = 4.17 Lac and Loss = 1.31Lac)

Queries
1. Which IT return forms do I have to fill?
ITR 4 or ITR 4S?
Or in case I don’t want to carry forward F&O Losses, can I use Form ITR 2 as well?
2. In case ITR 4 to be used, what information to be put in return since I am a salaried person and not a business man.
3. Do I need to maintain any books? if yes what kind of books.
4. Do I need to get my books tax audited?

Thanks in anticipation.
Amit Arora

Amol S Joglekar

Amol S Joglekar (Expert)

18 August 2015 1. File ITR 2. FNO is not your business activity, so dont use ITR 4
2. N.A.
3. No. You dont need to maintain thebooks of accounts as such. Keep the trail of RECORD of all FNO transactions. (In fact your ledger as maintained by your BROKER is sufficient)
4. Audit not required.

Message likes : 2 times

Amit Arora

Amit Arora (Querist)

18 August 2015 Thanks for your reply Mr Amol.

What I understand after getting some information on internet, Trading in F&O is considered as a business and hence have to use ITR4 compulsorily.
Are you 100 % confident that I have to file ITR 2 and not ITR 4.
Regards,
Amit Arora

Message likes : 1 times

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

22 July 2025 Hey Amit,

Great question! Let me clarify the treatment of F&O losses for a salaried person:

1. Which ITR to file?
If you trade in F&O and your turnover (i.e., sum of absolute values of profits and losses) exceeds Rs 2 crore, then F&O is treated as a business, and you must file ITR-3 or ITR-4 (if opting for presumptive taxation).

But your turnover is Rs 4.17 lakh only which is way below the Rs 2 crore threshold.

So, in your case, F&O income/loss is treated as 'Speculative Business Income' or 'Capital Gains' only if it is intraday or delivery-based. However:

Intraday: It's speculative business income → needs ITR-3 or ITR-4.

F&O (Futures & Options) is classified as 'Non-speculative business income'.

Since your F&O turnover is below Rs 2 crore, you do NOT need to maintain books or get audit.

You can file ITR-3 or ITR-4 if you want to report F&O losses and carry forward losses.

ITR-2 does not allow declaring business income or losses, so you cannot use ITR-2 if you want to report and carry forward F&O losses.

2. If you don’t want to carry forward F&O losses, can you use ITR-2?
Yes, you can file ITR-2 but you will have to forego the option of carrying forward losses from F&O.

3. For a salaried person who trades in F&O:
Since you have salary income + capital gains + F&O losses, and want to carry forward losses, best is to file ITR-3 (or ITR-4 if you opt for presumptive taxation).

ITR-3 is meant for individuals and HUFs having income from business or profession.

4. Do you need to maintain books or get audit?
Since your turnover is small (4.17 lakh), no audit required.

You can maintain transaction statements from your broker as your books.

Summary for you:
Point Recommendation
Income heads Salary, Interest, Capital Gains, F&O losses
Want to carry forward F&O losses File ITR-3 (best option)
Turnover threshold Below Rs 2 crore (no audit)
Need to maintain books Keep transaction details, no formal books needed
Want to file ITR-2 Possible, but no carry forward of losses

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