ITR 3 Filing Online for AY 2025-26: F&O Trading Income, Loss Reporting, Audit & Balance Sheet Explained

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by

Himanshu
in

Filing your Income Tax Return (ITR 3) for FY 2025-26 (AY 2026-27) can be confusing, especially if you have F&O (Futures & Options) trading income, losses, or audit requirements. Many taxpayers struggle to understand how to properly file ITR 3, report their trading P&L, balance sheet, and claim refunds. This detailed guide will explain everything step by step in simple language.

What is ITR 3?

ITR 3 is the income tax return form applicable to individuals and Hindu Undivided Families (HUFs) who have income from business or profession. If you are into F&O trading, intraday trading, or running a business, you are required to file ITR 3.

Unlike ITR 1 or ITR 2, which are simpler, ITR 3 requires you to report:

  • Trading income (F&O, intraday, speculative)
  • Profit & Loss (P&L) statement
  • Balance Sheet details
  • Business/Professional income
  • Other income (salary, house property, capital gains, etc.)

Understanding Tax P&L Report for ITR 3

Before starting ITR 3 filing, it’s important to download your Tax P&L report from your broker’s platform (like Zerodha, Upstox, ICICI Direct, etc.). This report provides a ready-made summary of:

  • F&O turnover
  • Trading profit/loss
  • Speculative income/loss
  • Expenses like brokerage, transaction charges, GST, and SEBI fees

This report is crucial because income from F&O trading is considered business income and must be reported under the head “Business & Profession.”

Basic Checks Before ITR 3 Filing

Before filing ITR 3, make sure you:

  1. Have your Form 26AS & AIS (Annual Information Statement) ready to reconcile TDS, advance tax, and other details.
  2. Verify your Tax P&L report with broker statements.
  3. Collect bank statements related to your trading account.
  4. Check whether tax audit is applicable.

Tax Audit Rule for F&O Traders (FY 2025-26):

  • If F&O turnover exceeds ₹10 crore, audit is mandatory.
  • If turnover is between ₹2 crore – ₹10 crore and you haven’t opted for presumptive taxation, audit may apply.
  • Even if turnover is less than ₹2 crore but you have losses, you may still need to maintain books of accounts and file accordingly.

Trading, P&L and Balance Sheet Reporting

In ITR 3, you must provide:

  • Trading P&L: Report your net profit or loss from F&O trading, intraday trades, and speculative transactions.
  • Balance Sheet: Even if you are an individual trader, you must declare basic assets (cash, bank balance, investments) and liabilities.
  • Business Expenses: You can claim expenses like internet bills, brokerage, advisory fees, depreciation on laptop/PC, office rent, etc. to reduce taxable income.

This ensures correct reporting of your financials and avoids scrutiny from the Income Tax Department.

Step-by-Step ITR 3 Filing Process (FY 2025-26)

  1. Login to Income Tax Portal – Visit income tax e-filing portal and log in with PAN & password.
  2. Select ITR 3 – Choose “File Income Tax Return” → AY 2026-27 → ITR 3.
  3. Fill Personal Details – Verify PAN, Aadhaar, bank details, and contact information.
  4. Add Income Sources:
    • Salary/Pension (if applicable)
    • House Property Income
    • Capital Gains
    • Business & Profession (Trading P&L goes here)
  5. Upload Trading P&L Data – Enter turnover, profit/loss, and expenses based on your broker’s Tax P&L report.
  6. Balance Sheet Entry – Add details of cash, bank balances, investments, and liabilities.
  7. Claim Deductions – Under Chapter VI-A, claim deductions for investments (80C, 80D, NPS, ELSS, etc.).
  8. Tax Calculation – The portal auto-calculates tax liability. Verify under Old vs New Tax Regime which is more beneficial.
  9. Tax Audit (if applicable) – If audit is required, upload the audit report (Form 3CA/3CB + Form 3CD) prepared by a Chartered Accountant.
  10. Preview & Submit – Review all details carefully and submit.
  11. E-Verification – Complete e-verification via Aadhaar OTP, Net Banking, or DSC.

Refund and Final Submission

If you have paid excess advance tax or TDS, the portal will automatically show the refund amount. Enter correct bank details to receive the refund directly in your account.

Once submitted and verified, download the ITR-V acknowledgment for your records.

Key Takeaways for F&O Traders Filing ITR 3

  • Always use your broker’s Tax P&L report for accurate turnover & profit reporting.
  • Claim genuine business expenses to reduce tax liability.
  • If turnover or losses trigger audit requirements, consult a Chartered Accountant.
  • Don’t ignore Form 26AS & AIS reconciliation before filing.
  • Filing ITR 3 correctly ensures you can carry forward F&O trading losses for 8 years and set them off against future profits.

Conclusion

Filing ITR 3 for FY 2025-26 (AY 2026-27) can look complicated, but with the right steps, it becomes easy. For F&O trading income and losses, proper reporting of P&L, balance sheet, and audit requirements is critical. Following this guide will not only help you stay compliant but also save taxes legally.

Disclaimer

This article is for educational purposes only. Income tax rules are subject to change as per government notifications. Please consult a Chartered Accountant (CA) or tax professional before filing your ITR to ensure compliance with the latest laws.