[FAQs] ITR Filing for F&O, Crypto & Foreign Assets | AY 2026-27

This guide explains key ITR filing requirements for taxpayers earning income or incurring losses from F&O trading, capital gains, cryptocurrencies and online games. It covers the applicable ITR forms, filing due dates, calculation of F&O turnover, carry-forward of trading losses, TDS refund claims and disclosure of foreign assets and retirement accounts for AY 2026-27.

FAQ 1. I am a trader in Futures and Options (F&O). This year, I incurred a loss in F&O trading. Do I still need to file my Income Tax Return (ITR) even though my income is below the exemption limit?

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.

FAQ 2. I am a salaried individual and have earned long-term capital gains amounting to Rs. 1,20,000 taxable under Section 112A. Which ITR form should I use for filing my return?

Up to Assessment Year 2024-25, even if an assessee’s LTCG under Section 112A fell within the exemption limit of Rs. 1.25 lakhs and no tax was payable, the presence of capital gains income rendered them ineligible to file ITR-1 or ITR-4. Instead, they were required to file returns in ITR-2 or ITR-3 forms, which are more complex and time-consuming.

Now, ITR forms allow salaried individuals eligible to file ITR-1 and small business owners eligible to file ITR-4 to continue using these forms, even if they have LTCG, provided the total LTCG does not exceed Rs. 1,25,000, which is taxable under Section 112A, and there is no brought-forward or carry-forward capital loss.

Accordingly, a salaried individual having LTCG of Rs. 1,20,000 can choose ITR-1 to file a return of income for Assessment Year 2026-27.

FAQ 3. I am a salaried employee. I do trading in derivatives such as futures and options. What is the deadline for filing my ITR?

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, and in such cases, the due date for filing your ITR will be 31^st October. However, if your turnover is below the specified limit, the due date to file the ITR will be 31^st August.

FAQ 4. How to calculate the turnover in the case of F&O?

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

(a) The total of favourable and unfavourable differences is taken as turnover.
(b) 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.
(c) In respect of any reverse trades, the difference thereon should also form part of the turnover.
(d) 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.
(e) 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:

Security name	Type	Qty	Option Premium Paid	Option Premium Received	Strike price	Spot/Settlement price	Profit / (Loss)	Remarks
Cipla	Futures	500			1,495	1610	57,500	Squared off
BHEL	Futures	200			208	104	-20,800	Squared off
IOC	Put (Sell)	100		5	50		–	Open (Note 1)
ITC	Put (Sell)	100	40	10			-3,000	Squared off
Axis Bank	Futures	200			1229		–	Open (Note 1)
TCS	Call (Buy)	100	20		1500	1600	8,000	Delivery Settlement
Infosys	Call (Buy)	100	10		1000	950	(1000) (Note 2)	Expired
GAIL	Put (Buy)	50	4		100	90	300	Delivery Settlement

Note 1 – Mr. A has an open position in underlying options as on 31^st March 2023. Thus, the turnover from such options shall be computed in the financial year in which the transaction is squared off or settled for delivery.

Note 2 – Delivery-based settlement in a Call (Long) option transaction can be made only if the option is “in the money”, which means the market price (settlement price) is above the strike price (trade price). However, if there is a profit/loss in the option premium amount, then it shall be considered in the calculation of turnover.

Thus, the turnover of Mr A shall be as follows:

Security Name	Profit/(Loss)
Cipla	57,500
BHEL	(20,800)
IOC**	–
ITC*	(3,000)
Axis Bank**	–
TCS	10,000
Infosys	(1,000)
GAIL	500
Total Turnover	92,800
* As the amount of premium received is already considered for computing the profit or loss from the transaction, it is not included again while computing the turnover. ** Mr. A has open position in underlying shares as on 31st March 2023. Hence, the turnover from such options shall be computed in the financial year in which transaction is squared off or settled for delivery.

FAQ 5. I am a senior citizen, and my only source of income is the interest earned from bank deposits, which is below the maximum exemption limit. The bank has already deducted tax (TDS) from this income. Am I required to file an ITR?

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.

FAQ 6. Which ITR form is to be used to report income from crypto?

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.

FAQ 7. I only have income from cryptocurrencies. When is the due date for filing my ITR?

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 31^st July.

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 31^st October. However, if your turnover is below the specified limit, the due date for filing your ITR will be 31^st August.

FAQ 7. Which ITR form is to be used to report winnings from online games?

Any winnings from online games shall be taxable under Section 115BBJ 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.

FAQ 8. I have returned to India after working in the USA. For AY 2026-27, I am a tax resident of India. Can I still file ITR-1?

The eligibility to file ITR-1 depends not only on your residential status and income but also on whether you hold any foreign assets or have income from foreign sources.

The ITR-1 is available only to resident individuals having specified sources of income and who do not hold any foreign assets or earn foreign income. If you have returned to India after working abroad and continue to hold any foreign asset, such as a foreign bank account, retirement account, shares, mutual funds or any other financial interest outside India, you are not eligible to furnish ITR-1.

Therefore, if you are required to report foreign assets in Schedule FA, you should furnish ITR-2 if you do not have business income or ITR-3 if you have income from business or profession.

FAQ 9. I have a foreign retirement account but no foreign income. Which ITR should I file?

A foreign retirement benefit account is regarded as a foreign asset. Therefore, even if no income has accrued or been received from such account during the relevant previous year, the taxpayer may still be required to disclose the account in the Income-tax Return.

Therefore, a resident taxpayer holding such accounts is not eligible to furnish these simplified return forms. Hence, if you have salary income and hold a foreign retirement account, you should ordinarily furnish ITR-2. If you also have income from business or profession, the appropriate form would be ITR-3.

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