1. Futures & Options (F&O) trading has been gaining popularity among taxpayers, but the reality is that many individuals end up incurring losses. What makes it trickier is the confusion over how to report these losses in ITR 3 with successful validation.
2. This article provides a clear, step-by-step guide to reporting F&O losses in ITR 3 without triggering any validation errors. Let’s begin filing the ITR 3 with a real-life example.
3. Arindam is a salaried employee and actively engaged in Future & Options and intraday trading. Here’s a snapshot of his income, Intraday and F&O transactions for FY 2024–25.
| (a) | Income from Salary | Rs. 10,80,634 |
| (b) | Income from other sources – Dividend | Rs. 1,38,575 |
| (c) | Income from other services ( TDS deducted under section 194(J) | Rs. 30,270 |
| (d) | Losses from Future & Options | Rs (65,344) |
| (e) | Expenditure related to F&O trading | Rs. 25,848 |
| (f) | Losses from Intraday Trading ( including expenditure) | Rs. (741) |
| (g) | Turnover from Intraday Trading | Rs. 72,027 |
| (h) | Turnover ( absolute ) from F&O | Rs. 3,50,000 |
| (i) | Cash in Hand | Rs. 10,000 |
| (j) | Cash at Bank | Rs. 5,00,000 |
4. In this article, we’ll focus exclusively on the schedules and tables relevant to F&O and intraday trading.
5. Audit Information : Go to General Information > Audit Information>a1 > Are you liable to maintain accounts as per section 44AA ?. Select ‘ Yes’ as the F&O losses cannot be reported in ‘no accounts’ cases.
Select ‘No’ for all the other tabs, such as Audit requirement, etc.
6. Nature of Business: Select the code from the drop-down menu and enter the name. The code for F&O is 21010, while for intraday trading it is 21009.
7. Validation Error: Make sure to fill in the description field as well. Leaving it blank will trigger a validation error.
| Description | Minimum 1 Characters are required |
8. INTRADAY TURNOVER & LOSS : Enter the intraday turnover and loss in Tables 12(a) and 12(b) of Schedule Part A – Trading Account.
9. F&O LOSSES & EXPENDITURE : Enter the F&O losses & expenditure in Schedule Part A – P&L> Debit to Profit & Loss Account > 46. Other expenses ( specify nature & amount).
10. INCOME FROM OTHER SERVICES Enter Income from other services in Schedule Part A – P&L> Credit to Profit & Loss Account > 14(xi) any other income ( specify nature & amount).
11. INCOME FROM DIVIDEND: Income from dividend must be reported under the head ‘Income from Other Sources.’ However, it should also be disclosed in Schedule Part A – P&L> Credit to Profit & Loss Account >14(iii)
12. UPLOAD LEVEL VALIDATION ERROR: Dividend income must also be reduced from Schedule BP; failing to do so will result in an upload level validation error :
13. REDUCTION OF DIVIDEND INCOME IN SCHEDULE BP: The path is Schedule BP > A. From business or professions other than speculative business and specified business > 3.Income/ receipts credited to profit and loss account are considered under other heads of income.
14. SCHEDULE BALANCE SHEET: Enter the Source of funds and Application of funds in the Balance Sheet schedule.
15. Now it’s time for the climax—let’s check whether the validation is successful or not. Proceed to verification, and here it is :
16. Click on preview & proceed to validation
Disclaimer: The article is for educational purposes only.
The author can be approached at caanitabhadra@gmail.com
Author Bio
HOW CAN WE REPORT (AMOUNT) THE F&O TURNOVER IN 3CD
An informative and very useful article, thanks a lot.
Thanks for your humble comment. It truely encourage the autor to keep improving.
Mam, What is difference between 12b intraday losses and 46 (1) and (2) , do we record same amount of FNO losses once in 12b and then in 46(1) and (2) , lets say there is 5 lakhs INR of losses in Intraday options trading, do i need to report at both places 12b and 46 (other expenses) or at any one place is suffice
12 (a) & ( b) is for intraday whereas 46 for F&O . Both are different and to be reported seperately in respective column as mentioned.
Is tax audit applicable if TO from F&O exceed 10 crs?
Yes
WHERE TO REPORT THE F&O TURNOVER (ABSOLUTE TURNOVER) IN ITR 3
F&O Absolute turnover is not required to be reported in the ITR.
Absolute turnover is required to decide the TAX Audit eligibility.
Madam, article is very helpful.
only one question, someone doing first time itr 3 due to fno and intraday.
balance in fno requires only tota bank balance, cash in hand and both of these total as capital amount.
we do not have to disclose other fixed assets like home or liabilities like unsecured loans from relatives ???
You are not required to report fixed assets , unsecured loan etc. in case of f&O trading.
Very informative madam.
Glad you find it informative.
Thanks for your humble comment.
In ITR-3, what are we supposed to report under Intraday & F&O turnover in the case of share trading?
Intraday turnover & profit/ loss amount.
F&O profit / loss & expenditure.
Thanks Very useful article
Glad you find it useful. Thanks for humble comment.
THANKS A LOT FOR A VERY USEFUL INFORMATION
Thanks for your humble comment.
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