Intraday and futures and options (F&O) traders must now file ITR-3 for AY 2026-27, as reported by Mint and Personal Finance News. This form applies specifically to traders because income from intraday trading is considered speculative business income, while income from F&O is treated as business income. Previously, traders could report trading income as business income, but new regulations require more detailed disclosures. The wrong ITR form selection can delay processing and invite queries from the tax department, making it crucial for traders to choose the correct form based on their trading activities. Mint emphasizes that ITR-2 is designed for taxpayers reporting only capital gains from investments, and ITR-1 is applicable only in limited cases where other essential eligibility conditions are met, highlighting the importance of proper form selection.
Under Schedule Nature of Business or Profession (ITR-3), traders must select specific business codes for their trading activities. According to the Income Tax Department, the code for speculative trading, including intraday, is 21009, while the code applicable for F&O is 21010. For individuals buying or selling shares purely as a business, the relevant code is 21011. As per Mint, the ITR-3 is a document that requires an individual to discuss the correct nature of their business, in accordance with the prescribed business codes, making it critical to report the correct business details after data matching. The latest ITR-3 asks traders to mention the exact nature of their business by using the prescribed business activity codes, making this selection more critical than ever.
Under Schedule Part A - Trading Account of ITR-3, traders must disclose specific details that were not required in previous years. As reported by Personal Finance News, traders need to report turnover from intraday trading, income from intraday trading transferred to Profit and Loss account, turnover from futures & options trading, and income from futures & options trading transferred to the Profit and Loss account. The biggest change this year is the requirement to disclose intraday and F&O figures separately. Under the Trading Account section of ITR-3, taxpayers now need to report turnover from intraday trading separately from turnover generated through F&O transactions. The income earned from both activities also needs to be shown independently before it is transferred to the Profit and Loss Account. Previously, the ITR form didn't ask traders to separately declare their F&O income. The new form now has a dedicated, separate disclosure of turnover and income within the profit and loss reporting - a direct response to the surge in derivatives activity. The capital gains schedules have shed the pre-23 July 2024 rate references, since the Finance Act, 2025 rates now apply for the full year.
The most significant development this year is the permanent statutory change giving non-audit taxpayers filing ITR-3 and ITR-4 a due date of 31 August of the assessment year, in place of the common 31 July date. This change is effective from AY 2026-27 onwards, not a one-time extension. The window for a revised return under Section 139(5) now runs up to the end of the assessment year, i.e. 31 March 2027 for AY 2026-27, against the earlier 31 December cut-off. The due date to file ITR-3 in non-audit cases is now 31 August 2026, providing an additional month for business and professional filers to close books and reconcile. Salaried taxpayers on ITR-1 and ITR-2 remain at 31 July 2026, while business and professional filers get the additional month to close books and reconcile. Meeting the filing deadline is just as important as reporting income correctly. For taxpayers whose accounts are not required to be audited, the due date for filing ITR-3 for AY 2026-27 is 31 August, and waiting until the last few days can increase the chances of mistakes, especially for traders who need to calculate turnover, reconcile broker statements and report multiple trading transactions.
Traders must maintain books of accounts if their turnover crosses ₹25 lakh or net profit exceeds ₹2.5 lakh in any of the preceding 3 years. According to the Income Tax Department, the book of accounts needs to be audited when a taxpayer's turnover crosses ₹10 crore and cash transactions make up less than 5% of total business turnover. The due date to file ITR-3 in audit cases is 31 March 2027 or completion of assessment, whichever is earlier. The transfer pricing report under Section 92E applicable when transfer pricing applies, and Form 3CD must precede the return if audit applies. GST-to-books turnover reconciliation is required, with turnover per GSTR-1/GSTR-3B reconciling with the P&L, and partner-firm cross-check ensuring remuneration and interest reported in Schedule IF agree with what the firm has claimed in its ITR-5 and books. Maintaining proper financial records has become even more important for active traders. Keeping broker statements, contract notes, bank records and profit calculations organised can make tax filing much smoother and help if any clarification is sought later. Some taxpayers assume they can simply choose presumptive taxation and file ITR-4 to simplify compliance, but this may not be appropriate for intraday or F&O income, as business income from trading has specific tax treatment.
