This guide explains the crucial aspects of Futures & Options (F&O) taxation in India. It clarifies that F&O income is categorized as 'Non-Speculative Business Income', detailing how to calculate turnover based on 'absolute profit' plus premiums. The guide outlines various deductible expenses to reduce taxable income and explains when a tax audit is mandatory, especially for losses or specific turnover thresholds. Finally, it covers how to manage F&O losses through set-off and carry-forward, and provides essential information on ITR filing (ITR-3), applicable tax rates, and advance tax payments, ensuring traders stay compliant and manage their finances effectively.

This guide explains the crucial aspects of Futures & Options (F&O) taxation in India. It clarifies that F&O income is categorized as 'Non-Speculative Business Income', detailing how to calculate turnover based on 'absolute profit' plus premiums. The guide outlines various deductible expenses to reduce taxable income and explains when a tax audit is mandatory, especially for losses or specific turnover thresholds. Finally, it covers how to manage F&O losses through set-off and carry-forward, and provides essential information on ITR filing (ITR-3), applicable tax rates, and advance tax payments, ensuring traders stay compliant and manage their finances effectively.