A trading loss is only worth what you can carry forward

Q: Is my F&O activity speculative or non-speculative?

Futures and options are not speculative — they are an ordinary business, so a loss carries forward for 8 years and can be set against business income. Intraday equity, bought and sold without taking delivery, is speculative: 4 years, and only against speculative income. A trader doing both runs both buckets in the same return, and BharatTax keeps them apart.

And that depends on two things: which head the loss belongs to, and whether you filed on time. Get the second one wrong and the first stops mattering — the loss is reported, and then it is gone.

What each loss is worth

The same rupee of loss is worth eight years against business income, or four against speculative income only, depending on where it sits. This is the table the return is built on.

Loss	Section	Carried forward	Set off only against
House property loss	71B	8 years	House property income
Non-speculative business loss	72	8 years	Business income
Speculative business loss	73	4 years	Speculative income only
Specified business loss (35AD)	73A	No limit	Specified business only
Short-term capital loss	74	8 years	Short-term or long-term capital gain
Long-term capital loss	74	8 years	Long-term capital gain only
Loss from owning race horses	74A	4 years	Race-horse income

Unabsorbed depreciation has no window at all — it carries forward indefinitely u/s 32(2). Everything else above expires, and BharatTax drops a row from next year’s return when its window closes rather than carrying a loss that can no longer be used.

What your turnover actually is

Not the value of the contracts you traded — that figure is larger by orders of magnitude and belongs nowhere in the return. Turnover is built from the RESULT of each trade, and the losses add to it rather than cancelling the profits.

The calculator needs JavaScript. Turnover is the sum of the absolute result of each trade: a profit of ₹40,000 and a loss of ₹25,000 give ₹65,000, not ₹15,000.

The method BharatTax applies. Turnover is the sum of the absolute result of each trade — favourable and unfavourable differences added, not netted. Premium on the sale of options and differences on reverse trades are not added. Wider readings of the method are in circulation and produce a larger figure for an option writer, so the one in use here is named rather than left to be inferred.

The threshold it is measured against. A tax audit u/s 44AB becomes a live question above ₹1 crore of turnover — or above ₹10 crore where your digital share reaches 95%. Ten times the headroom, decided by how much of the year went through a bank.

Both sides have to reach 95% — receipts and payments alike. A trader banking every rupee of receipts but settling costs in cash does not get the higher limit, which is why the calculator asks twice and works from whichever figure is lower.

What the threshold does not settle is the audit itself. Crossing the line makes the question live rather than answering it: Section 44AB has arms this page does not model, so an audit can be required for reasons that have nothing to do with turnover. That determination is your accountant’s.

Speculative or not? It depends which one you traded

The two are not the same, and the difference is worth four years:

Activity	Treated as	Loss carried forward
Intraday equity — bought and sold without taking delivery	Speculative business	4 years, against speculative income only
Futures and options	Ordinary business — not speculative	8 years, against business income

This is the classification that costs traders the most when it goes the wrong way. Put a derivatives loss in the speculative bucket and you have given up 4 of the 8 years, and restricted what is left to speculative income you may never earn again.

A trader who does both runs two buckets in the same return. BharatTax reports them separately, applies the right window to each, and enforces the set-off restriction when the loss is eventually used — so a speculative loss cannot quietly absorb itself against your derivatives profit.

Delivery-based equity is a third question on a different axis altogether — business income or capital gains, decided by the facts of the holding rather than by this rule. That one is worth an accountant’s hour if you are not sure.

The due date is the whole game

A loss carried forward has to be claimed in a return filed by the due date u/s 139(1) — 31 August 2026 for a non-audit case in AY 2026-27. File after it and the return is still valid, the loss is still reported, and the carry-forward is forfeited.

For a trader coming off a losing year this is usually the single most expensive line in the return, and it is decided by a date rather than by any figure.

Reconciling the broker against the AIS

A broker P&L and an AIS almost never agree, and neither is wrong. They net differently, they treat charges differently, and the AIS carries every reported source rather than one account.

BharatTax imports the AIS and the 26AS, de-duplicates, and puts them beside your own figures so the difference is visible. Where the two statements disagree on tax deducted, the return follows the 26AS — that is the credit the department will allow.

Questions

How long can I carry a trading loss forward?

It depends which bucket the loss falls in, and the difference is large. A non-speculative business loss is carried forward for eight assessment years u/s 72 and set against business income. A speculative loss is carried forward for four u/s 73 and can only be set against speculative income. A capital loss runs eight years u/s 74. The table on this page lists all seven.

What happens if I file late?

A loss you want to carry forward has to be claimed in a return filed by the due date u/s 139(1). File belated and the loss is still reported, but the right to carry it forward is gone — which, for a trader with a bad year, is usually the most expensive consequence of missing a date. House property loss is the exception.

Is my F&O activity speculative or non-speculative?

Futures and options are not speculative — they are an ordinary business, so a loss carries forward for 8 years and can be set against business income. Intraday equity, bought and sold without taking delivery, is speculative: 4 years, and only against speculative income. A trader doing both runs both buckets in the same return, and BharatTax keeps them apart.

I trade intraday equity as well as F&O. Does that matter?

It changes what each loss is worth, so yes. The two sit in different buckets with different windows, and a speculative loss cannot be set against your derivatives profit. Reporting them as one figure is the mistake that quietly costs the most — BharatTax reports them separately and applies the right window to each.

Which ITR form do traders file?

ITR-3, in almost every case. Business income — speculative or not — takes you out of ITR-1 and ITR-2, and out of ITR-4 as soon as you have losses to carry forward or books to report. BharatTax moves you to the right form as your figures require rather than letting you finish on the wrong one.

Do I need a tax audit?

BharatTax flags where a tax audit u/s 44AB may be required based on the figures you enter, and says so on the computation rather than in the fine print. Whether the audit is actually required is a determination for your accountant; what the software does is make sure the question is not missed.

My broker P&L does not match my AIS.

That is the normal case, not an error. A broker statement is written for a trader and the return is written for the department: they net differently, they treat charges differently, and the AIS carries transactions from every source, not just the one broker. BharatTax reconciles them side by side and shows you the difference rather than picking one.

Prepare the return that keeps the loss alive

ITR-3 with the trading activity reported in the right bucket, the carry-forward table built from it, and the AIS reconciled against your broker. Nothing is payable until you download the JSON to file with.

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