[FAQs] ITR Filing and Compliance Guide – India | FY 2024-25

Individuals and HUFs must file an ITR if their income before claiming capital gain exemption and deductions under Chapter VI-A exceeds the maximum exemption limit.

Since you have incurred a loss during the year, you are not required to submit an ITR under normal circumstances. However, it is still necessary to file the ITR to carry forward the F&O losses. Therefore, you should file your return of income on or before the due date to carry forward the losses. 

The gains or losses arising from trading in F&O are always taxable under the head of ‘Profits and Gains from Business or Profession’. Income or loss from F&O shall be deemed as normal business income (non-speculative business) even though delivery is not affected in such transactions. 

As your income from F&O falls under the business head, it is important to calculate your turnover to determine whether you are required to have your accounts audited. The turnover computation is crucial because the requirement for a tax audit is based on turnover. If your turnover exceeds the specified limit, you must have your accounts audited. In such cases, the due date for filing your ITR will be 31st October.

However, if your turnover is below the specified limit, the due date to file the ITR will be 15th September[1].

The Income-tax Act does not contain any provision or guidance for computing turnover in F&O trading. However, the ‘Guidance Note on Tax Audit’ issued by the ICAI prescribes the method of determining turnover. This method for computing turnover is only for the purpose of calculating ‘turnover’ for tax audit purposes. The turnover in such types of transactions is to be determined as follows: 

• The total of favourable and unfavourable differences is taken as turnover. 

• Premiums received on the sale of options are also included in turnover. However, where the premium received is included for determining net profit for transactions, it should not be included separately. 

• In respect of any reverse trades, the difference thereon should also form part of the turnover. 

• In case of an open position as at the end of the financial year (i.e., trades which are not squared off during the same financial year), the turnover arising from the said transaction should be considered in the financial year when the transaction has been actually squared off. 
• In case of delivery-based settlement in a derivatives transaction, the difference between the trade price and the settlement price shall be considered as turnover. Further, in the hands of the transferor of the underlying asset, the entire sale value shall also be considered as business turnover where the underlying asset is held as stock in trade. 

For example, Mr A enters into the following transaction during the financial year: 

In derivative transactions, the aggregate of both favourable and unfavourable differences (i.e., income and loss) is considered the turnover. Further, the premium received on the sale of options is also included in turnover if the same is not included while determining the net profit or loss from the transaction. Thus, the turnover of Mr. A shall be as follows: 

Filing an ITR is not mandatory since your income is below the maximum exemption limit. However, it is important to note that if the amount of tax paid by an individual exceeds his actual tax liability, the excess amount is considered an ‘income-tax refund’ that can be claimed by filing a return. If you are eligible for an income-tax refund, it can only be claimed by filing the ITR. Since the tax has been deducted from your interest income, filing the ITR to claim the refund of TDS is advisable. You cannot claim any refund if you do not file the return. 

If you have income from transferring cryptocurrencies (Virtual Digital Assets), you should report such income in ‘Schedule VDA’ in ITR-2 or ITR-3. It is important to note that you cannot use ITR-1 or ITR-4 to report this income. 

If you earn income only from cryptocurrencies, the due date for filing your ITR depends on the head under which you report this income. When reporting income from the transfer of virtual digital assets in ‘Schedule VDA’, you need to select whether it falls under the category of business income or capital gains. Here is how the due dates are determined based on the chosen category: 

• Capital Gains – If you report the income as capital gains, your due date for filing the ITR will be 15th September[3]. 
• Business Income – If you report the income as business income, you need to compute the turnover to determine whether you must get your accounts audited. If your turnover exceeds the specified limit, you must have your accounts audited, and in that case, the due date for filing your ITR will be 31st October. However, if your turnover is below the specified limit, the due date for filing your ITR will be 15th September[4] .

The Finance Act 2023 introduced a new Section 115BBJ to tax winnings from online games with effect from the assessment year 2024-25. Any winnings from online games shall be taxable under this provision at the rate of 30%. 

If you have winnings from online games, you should report such income in ‘Schedule OS’ in ITR-2 or ITR-3. It is important to note that you cannot use ITR-1 or ITR-4 to report this income.