ITR form query

Your wife must file ITR-3 to maintain her track of losses. The brought-forward F&O loss will auto-populate in Schedule CFL, provided last year's return was filed on time. This brought-forward loss cannot be set off against savings bank interest income, as past business losses can only offset active business profits; hence, the loss will be carried forward to the next year.

F&O and intraday trading are treated as business income, not capital gains, under the Income Tax Act. This changes your ITR form.

ITR form to file: ITR-3 (individuals and HUFs with business or professional income). You cannot use ITR-1 or ITR-2 if you have F&O or intraday trading activity, even if you made a loss.

Key treatment:

• F&O losses: non-speculative business losses. Can be set off against most other business income. Carry-forward for 8 years if return filed on time.
• Intraday equity losses: speculative business losses. Can only set off against speculative income. Carry-forward for 4 years.
• Tax audit: required if turnover exceeds Rs 10 crore (digital transactions) or Rs 1 crore (cash), or if declaring losses below the 6%/8% threshold under presumptive taxation. Note: Section 44AD is not applicable to F&O , books of accounts must be maintained.

For complete ITR-3 filing with F&O schedules and audit compliance, Tax Garden has CAs who handle trading income returns end to end.