ITR filing for F&O traders by August 31, 2026: Why turnover matters, how to calculate it

"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 31st October. However, if your turnover is below the specified limit, the due date to file the ITR will be 31st August," Taxmann Advisory and Research Team said in a report.

How to calculate F&O turnover

Under the Income-tax Act, 1961, there is no specific guidelines for calculation of turnover in F&O trading. However, the ‘Guidance Note on Tax Audit’ issued by the Institute of Chartered Accountants of India (ICAI) explains the method of calculating the turnover. This calculation method suggested in the ICAI's guidance note can be used for calculating turnover for tax audit.

As per the Taxmann's report, the total of favourable and unfavourable differences is taken as turnover. Further, the turnover includes the following:

• Premiums received on the sale of options. However, premium received should not be included separately if it has been included for determining net profit for transactions.

• The difference In case of any reverse trades

• In case of an open position as at the end of the 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.

• 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.

The report explained the calculation of turnover in case of F&O trading with the help of the following example:

Suppose, a taxpayer entered into the following transactions during the FY 2025-26:

In the above, there are open positions that shall be considered for turnover calculation in the financial year in which the transaction is squared off or settled for delivery.

Further, a 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," the report said.

In the above case, the turnover can be calculated as following:

In case of ITC in the above table, the amount of premium received is already considered for computing the profit or loss from the transaction. Therefore, it is not not included again while computing the turnover. In case of IOC and Axis Bank, the taxpayer has open position. Hence, the turnover from such options shall be computed in the financial year in which transaction is squared off or settled for delivery.