Friday, May 31, 2024

Understanding the Process of F&O ITR Filing

A Confounding Dive into NSE Trading Extension and F&O Taxation Guide

Let’s begin with the news about interest-rate derivatives trading timings being extended:

Starting from February 23, 2023, the National Stock Exchange of India (NSE) has extended market trade timings for interest rate derivatives till 5 pm. The move comes even as NSE is in talks with market participants on extending trading hours for F&O filing and equity trading till 11:55 pm. The bourse said it was concerned that limited trading hours on Indian exchanges were causing volumes to move offshore and may impact traders’ personal lives outside of their trading activities.

Is there any merit in longer stock market timings?

Longer trading hours could lead to increased trading volumes as traders have more time to enter and exit trades, leading to higher liquidity and more activity.

Indian traders and investors can benefit from longer F&O trading hours as they will be able to participate in global markets during their respective timing.

Brokerages may benefit from increased trading volumes and transaction fees, but they are also likely to face higher operational costs including staff cost, technology infrastructure etc.

Analyzing the flip side of it, longer work hours, potential burnout & fatigue faced by traders can lead to negative health impacts affecting decision making. Higher transaction costs due to increased intraday volatility is another concern for traders

Market experts say that it’s essential to extend trade timings at least in equity derivatives & currency segments so as to mitigate the overnight risk due to global uncertainties. Currently equity market trade timing for both cash & derivatives segments is between 9am-3.30pm.

Now let us dive into some useful insights on Future and Options ITR filing –

ITR-3 form gets used for reporting earnings from business or profession (PGBP) and taxes are computed at tax bracket applicable for each individual.

After you have submitted your F&O ITR on time you can subtract any costs associated with trading.

These costs may include

Broker’s Commission
Demat fees
Cost of research reports
Depreciation of trading equipment
Internet expenses etc from your earned income.

To claim costs for business purposes make sure that the expenditure is incurred directly and solely for that purpose. For example, you can deduct –

Brokerage/ broker’s commission.
Subscription to trading related journals.
Phone bills & internet bills.
Consultancy fees paid to professionals etc.
Wages paid to employees hired for business purposes

Make sure to maintain all the receipts and bills of such expenditure and preferably pay through cheque or bank transfer instead of cash. In case if you make an expense above Rs. 10,000 in cash, it won’t be eligible for claiming as a business expense.

If the expense has both personal and professional elements then claim a reasonable portion of it as a business expense.

Key takeaways while filing F&O ITR –

1) Ensure you don’t miss out reporting gains / losses from F&O transactions in tax return to avoid notice from tax department

2) If you report your F&O trading as business – You are eligible to claim your expenses for running that business but if reported as capital gain then can’t claim those expenses

3) There are also tax benefits to reporting losses. If you’re an individual or corporation, futures and options trading is typically considered business income.

The ambiguity surrounding future and options trading — and trading in general — is that people don’t understand the rules. One is F&O ITR Filing. Don’t worry though, because TaxBuddy, one of India’s leading tax filing platforms, can help! With its specialized subscription package for Future and Options trading, you can leave the difficulty of complying with tax regulations related to it behind.


Please enter your comment!
Please enter your name here



Hot Topics

Related Articles