Intraday trading feels exciting because the trades start and end on the same day, giving a chance to lock in profits fast. With the rise of retail traders and the ease of app-based execution, more investors are exploring short-term market plays.
However, these fast trades come with tax responsibilities too. Since intraday is treated as a speculative business activity in India, the traders must follow specific tax rules, charges, and compliance requirements.
This blog explains Tax on Intraday Trading, how profits and losses are taxed, turnover rules, ITR filing, and legal ways to reduce tax outflow.
What Is Intraday Trading Tax?
Intraday trading in India counts as speculative business income. Any profit from same-day trades is added to total income and taxed at the regular slab rate, just like business earnings. This income is added to the total income of an individual and taxed at applicable slab rates, up to 30%.
Intraday losses fall under speculative business losses. These losses can be adjusted only against profits from other speculative trades. If they remain unused in the same year, they can be carried forward for four assessment years to offset future speculative gains. The traders must maintain proper records because a high turnover can trigger an audit, and they might also have to pay advance tax on trades.
Intraday as a Business Income (Tax Rule)
- Income Head & Tax Rates: Intraday trading in income tax counts as a business activity, so the profits are treated as speculative business income under Profits and Gains from Business or Profession. These earnings are added to the total income and taxed as per the regular tax slab, with no special capital gains rates.
- Deductible Expenses: The traders can lower their taxable income by claiming trading-related costs such as brokerage, research tools, internet and phone bills, and even depreciation on laptops or computers used for trading.
- Loss Treatment: Intraday losses are considered speculative losses, and the traders can adjust them only against speculative profits. If they remain unadjusted, they can carry them forward for four years to set off against future speculative gains.
- ITR Form & Due Date: Intraday traders must file ITR-3. The due date is September 15 if a tax audit is not required, and October 31 if a tax audit applies.
- Advance Tax: When total tax payable in a year goes above ₹10,000, advance tax has to be paid in four quarterly installments instead of waiting till the year ends.
- Tax Audit Rules: A tax audit applies when turnover crosses ₹1 crore. The limit increases to ₹10 crore only when both cash receipts and cash expenses remain within 5% of total transactions.
Types of Taxes in Intraday Trading
The following are the taxes and charges applicable to intraday trading in India, which affect the overall profitability.
Securities Transaction Tax (STT)
Security Transaction Tax (STT) is charged when a trader sells intraday shares. It is charged on the selling value of intraday trades, so the more trades are executed, the higher the cost gets. The STT on the sale of intraday equity is 0.025% on ₹25 lakh.
GST on Brokerage
GST is charged at 18% on the brokerage paid for each trade. It doesn’t apply to the trade value itself, but to the broker’s fee.
Exchange Transaction Charges
These are exchange-level fees applied on every executed order, and the rate varies between NSE and BSE based on the day’s turnover. The rates may differ between NSE and BSE, and they apply to the total turnover for the day.
SEBI Charges on Intraday
The Securities Exchange Board of India (SEBI) charges a small regulatory fee on the trading turnover. The amount is extremely low, 0.0001% of the price at which the assets are purchased or sold, or ₹10 per crore, but it still gets included in the overall cost of every trade.
Stamp Duty on Turnover
Stamp duty is charged on the buy side of the intraday trades based on the turnover. The rates are fixed at 0.003%, but they may change depending on state-level regulations.
How to Calculate Tax on Intraday Trading
Let’s see how to calculate tax on intraday trading depending on profit or loss scenarios!
Example Calculation (Profit Scenario)
A trader, aged 35, earns ₹15,00,000 salary and makes a net intraday profit of ₹4,00,000 after brokerage and charges. Since intraday profit is speculative business income, it is added to salary.
Total Income = ₹15,00,000 + ₹4,00,000 = ₹19,00,000
The trader uses the New Tax Regime for FY 2025–26, which allows a ₹75,000 standard deduction for salaried individuals.
Taxable Income = ₹19,00,000 – ₹75,000 = ₹18,25,000
Under the new regime, since the taxable income exceeds ₹12,00,000, the trader does not qualify for a rebate under Section 87A. So, slab rates apply directly.
Tax Calculation:
- ₹0 to ₹3,00,000: 0% tax = ₹0
- ₹3,00,001 to ₹6,00,000: 5% of ₹3,00,000 = ₹15,000
- ₹6,00,001 to ₹9,00,000: 10% of ₹3,00,000 = ₹30,000
- ₹9,00,001 to ₹12,00,000: 15% of ₹3,00,000 = ₹45,000
- ₹12,00,001 to ₹15,00,000: 20% of ₹3,00,000 = ₹60,000
- ₹15,00,001 to ₹18,25,000: 30% of ₹3,25,000 = ₹97,500
Total Tax Before Cess = ₹2,47,500
4% Health & Education Cess = ₹9,900
Final Tax Liability = ₹2,57,400
Example Calculation (Loss Scenario)
Now, for the loss scenario, let’s assume a trader earns a salary of ₹16,00,000 and ends the year with a net intraday loss of ₹1,50,000. Since intraday trades fall under speculative business income, this loss cannot be adjusted against salary income.
The standard deduction of ₹75,000 applies to salaried taxpayers, reducing the taxable income from ₹16,00,000 to ₹15,25,000.
The loss doesn’t vanish, though. It stays valid for the next four assessment years and can be used only when future speculative trades generate profit. To keep this benefit, the trader must file ITR-3 on time.
Tax Calculation Under New Regime (₹15,25,000)
- ₹0 to ₹3,00,000: 0% tax = ₹0
- ₹3,00,001 to ₹6,00,000: 5% of ₹3,00,000 = ₹15,000
- ₹6,00,001 to ₹9,00,000: 10% of ₹3,00,000 = ₹30,000
- ₹9,00,001 to ₹12,00,000: 15% of ₹3,00,000 = ₹45,000
- ₹12,00,001 to ₹15,25,000: 20% of ₹3,25,000 = ₹65,000
Total Tax Before Cess = ₹15,000 + ₹30,000 + ₹45,000 + ₹65,000 = ₹1,55,000
Health & Education Cess (4%) = ₹6,200
Final Tax Liability = ₹1,55,000 + ₹6,200 = ₹1,61,200
Intraday Turnover Calculation for ITR Filing
For intraday traders, turnover is not the total value of trades. It’s worked out solely based on the gain or loss on each individual trade. The intraday turnover is the absolute total of all profits and losses added together.
For example, if a trade earns ₹3,000 and another shows a loss of ₹5,000, the turnover becomes ₹8,000. It is calculated as ₹3,000 + ₹5,000, without considering the buy or sell values. This turnover figure is used to decide audit requirements and ITR rules for intraday traders.
Income Tax Slab Depends on Total Income
Tax slabs for the assessment year 2025-26:
| Income tax slabs | Income tax rates |
| Up to ₹ 3,00,000 | Nil |
| ₹3,00,001–₹7,00,000 | 5% above ₹3,00,000 |
| ₹7,00,001–₹10,00,000 | ₹20,000 + 10% above ₹7,00,000 |
| ₹10,00,001–₹12,00,000 | ₹50,000 + 15% above ₹10,00,000 |
| ₹12,00,001–₹15,00,000 | ₹80,000 + 20% above ₹12,00,000 |
| ₹15,00,001–₹50,00,000 | ₹1,40,000 + 30% above ₹15,00,000 |
| ₹50,00,001–₹100,00,000 | ₹1,40,000 + 30% above ₹15,00,000 |
| ₹100,00,001–₹200,00,000 | ₹1,40,000 + 30% above ₹15,00,000 |
| Above ₹200,00,001 | ₹1,40,000 + 30% above ₹15,00,000 |
Audit Rule for Intraday Trading
The tax audit rule applies when the trading turnover or business turnover crosses certain thresholds:
- ₹1 crore in a financial year is the general audit limit for business.
- ₹10 crore limit instead of ₹1 crore, only when the total cash receipts, including sales or turnover, are not more than 5%, and total cash payments, including expenses, are not more than 5%. If both conditions are met, intraday traders can trade without audit up to ₹10 crore turnover.
- An audit is also required when declaring a lower income than the presumptive scheme rules under Section 44AD, and the total income becomes taxable.
- If it is audited under another law, the same audit report is acceptable if it is submitted with the required form.
Intraday Trading Under Presumptive Taxation (44AD)
Intraday trading can be treated as a business. If the trader qualifies under Section 44AD, income may be reported at a fixed percentage of turnover instead of calculating the exact profit and expenses.
This applies only when the trader is eligible as a small business under the limits and conditions of Section 44AD. Once declared, no additional expense deductions are allowed, and the declared income becomes taxable at normal slab rates.
Which ITR Form to File for Intraday Traders?
Since intraday income is treated as business income, traders must report it using the ITR-3 form. It’s the only form that records business-style trading income in a clean and legit way.
Carry Forward Loss Rules
- Intraday losses during the year can be adjusted only against profits earned from other speculative business activities.
- Any remaining loss that isn’t adjusted in the current year can be carried ahead and used for up to four future assessment years.
- To carry forward these losses, the ITR-3 has to be filed within the original due date.
How to Reduce Taxes Legally
- Claiming Trading Expenses: Intraday traders can reduce tax by recording genuine costs such as internet bills, research tools, advisory fees, laptop depreciation, and brokerage charges.
- Carrying Forward Losses: Intraday losses aren’t useless, and can reduce future tax when carried forward for four years, as long as the return is filed within the due date.
- Choosing the Right Taxation Method: Some traders might even pick presumptive taxation if it matches their numbers, while others usually go with the business taxation method to claim full expenses and lower taxable income.
- Paying Advance Tax: Paying advance tax before the deadlines avoids any interest charges and keeps compliance smooth. It helps the trader to keep more of the profit earned.
Books & Records Needed for Tax Compliance
- Broker & Platform Records: Intraday traders need clear trade statements from brokers, P&L reports, contract notes, and expense bills for tools, internet, devices, or advisory plans.
- Track Income & Expenses Digitally: They might also keep a digital ledger or use accounting software to track turnover, profits, losses, and expenses.
Why Records Matter? These records make ITR filing easier, help in claiming deductions, and avoid issues during a tax audit.
Final Conclusion
Intraday trading looks fast, but taxes make a real impact on final earnings. Since it’s treated as a speculative business, the traders need to follow slab-based taxation, maintain records, and file ITR-3.
The turnover decides audit rules, and the losses become useful only when carried forward on time. These efficient tax planning methods reduce tax, whether through expense claims, advance tax payments, or choosing the right tax method.
Good trades make a profit, but smart compliance keeps more of it in hand.
FAQs
Yes, intraday gains are taxable and are treated as speculative business income and taxed under regular slab rates. The profit is added to income, such as salary or business income, and taxed accordingly. The losses also fall under speculative business rules.
Intraday profit is treated as speculative business income and taxed at normal income tax slabs. It gets added to total income, and no special capital gains rate applies to it. The traders can reduce taxable profit by claiming legal trading expenses.
Intraday loss is considered speculative loss. It can be set off only against speculative profit in the same year. If not fully adjusted, it can be carried forward for four years and used against future speculative gains, but only if ITR-3 is filed before the due date.
An audit is required when intraday turnover crosses ₹1 crore. The limit increases to ₹10 crore when both cash receipts and cash expenses stay below 5% of total transactions. Audit also applies when income is declared below the Section 44AD presumptive rates and becomes taxable.
The best regime depends on numbers. The traders with high expenses may benefit from the normal regime, as expenses reduce taxable income. Those with low expenses and stable profit might prefer presumptive taxation when eligible. If both methods are compared before filing, it gives a clearer benefit.
