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Sanjeev Govila458 Answers  |Ask -

Financial Planner - Answered on May 31, 2023

Asked on - May 29, 2023Hindi

I have income of INR 13 Lacs.. I have lost close to 5 Lacs in INTRADAY TRADING AND F & O Trading from 2020-2023 ..How can i save on Tax in current year ..Is it possible to show capital Loss during investment declaration..
Ans: You have raised the point whether your past losses in F&O and Intraday trading can be used to save tax now? There are some points to note here:-

1. F&O is classified as a non-speculative business while Intraday Trading is classified as speculative business.
2. Both speculative and non-speculative business incomes are added to your overall income including salary, other business income, interest on deposits, income from rentals, etc and taxed according to the applicable tax for you.
3. Losses arising from speculative transactions are called speculative losses. These losses can be carried forward for a period of up to four consecutive financial years. Also, they can be set-off only against speculative business income made during that period.
4. On the other hand, losses arising from non-speculative transactions (non-speculative losses) can be carried forward for a period of up to eight consecutive financial years. You can set-off non-speculative losses against any other business income except salary in the same year.
5. Usually, trading in futures & options must be reported as a business unless you have only a few trades (say if only 2-3 trades) in the financial year. Remember this also applies to individuals. You don’t have to be formally incorporated as a company or some legal entity to earn business income. Individuals can have business income too.

From your statement it seems that you have not reported your past losses. If you have not done so, then you would not be able to set them off in the manner given above. However, if you have any such losses in the last financial year whose Income Tax Return (ITR) is yet to be filed, you can use the set-off rules as given above.

For more clarity, do discuss it in more details with your tax filing person.
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