Futures and Options trading income is classified as non-speculative business income under Section 43(5) of the Income Tax Act 1961. F&O traders must file ITR-3. Turnover = absolute profits + absolute losses. Tax audit mandatory if turnover exceeds Rs 10 crore or profit below 6% of turnover. F&O losses can be carried forward for 8 years only if ITR is filed on time. Deductible expenses include STT, brokerage, internet charges, and software subscriptions.
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