How to File F&O in ITR-3 for FY 2025-26: Schedule BP, Slab Rates and Set-Off

You traded F&O in FY 2025-26. You filed ITR-1 or ITR-2 in the past. Now you are looking at ITR-3 for the first time and the schedule list — BP, CG, CFL, SI, Part B-TI, Part B-TTI — is unfamiliar territory. This article walks through every schedule an F&O trader will touch, with Anil's worked FY 2025-26 numbers carried forward from our F&O turnover and audit article.

Reading time: ~14 minutes. The Schedule BP walkthrough is the longest section — if you only need the final tax number, jump to Part B-TTI.

Why F&O must go on ITR-3

F&O on a recognised stock exchange is treated as non-speculative business income under Sec 43(5) proviso (d) of the Income Tax Act. That single classification has a chain of consequences: business income lands under "Profits & Gains from Business or Profession" — a head only ITR-3 supports. ITR-1 and ITR-2 cannot accommodate any income (or loss) from this head, so ITR-3 is mandatory the moment you have one F&O trade in the year. There is no minimum turnover or P&L below which you can stay on a simpler form.

If you read our F&O turnover and audit guide, you already met Anil — a retail F&O trader with ₹18L of turnover (ICAI 2022 method) and ₹8L of net P&L for FY 2025-26. Anil's turnover is well below both the ₹10 crore Sec 44AB(a) digital threshold and the ₹3 crore Sec 44AD presumptive ceiling, and he is declaring actual P&L (no prior 44AD history), so he does not trigger a tax audit. He is now filing ITR-3 without audit, and we will walk every schedule he fills.

One quick disambiguation before we go further. Intraday equity is also business income — but speculative business income under Sec 43(5) main clause. It sits in a different sub-row of Schedule BP (the speculative row) and follows different carry-forward rules (Sec 73, 4 years against speculative profit only — not 8). Anil has no intraday equity activity, so we will mention the speculative sub-row briefly in Schedule BP and not separately walk it. F&O — futures, options on equity, commodity, currency — is non-speculative throughout this article.

Anil's FY 2025-26 income profile

To keep the walkthrough concrete, here is Anil's full income for the year:

The salary figure is gross — before the ₹75,000 standard deduction under Sec 16(ia) for new regime. Anil's Gross Total Income after that deduction works out to ₹29,95,000; we will rebuild it line-by-line in Part B-TTI.

Regime: Anil is on the new regime by default. He has not filed Form 10-IEA to opt out, and from FY 2023-24 onwards the new regime is the default for individuals.

Books of accounts. Under Sec 44AA(2)(i) read with Rule 6F, an F&O trader must maintain books once net business income exceeds ₹2,50,000 (or turnover exceeds ₹25,00,000) in any of the last three years. Anil's ₹8L net P&L clears both, so he maintains a simple revenue/expenses ledger — broker contract notes serve as the underlying vouchers. We are not walking the full Sec 44AA mechanics here; that belongs in the audit-report article. Coming soon on the F&O pillar.

Schedule BP: where F&O business income lives

Schedule BP is the dense one. It is structured in five parts — A through E — and the F&O trader does not need to touch every row. Here is how Anil works through it.

Part A: P&L summary (books-maintained case)

If you maintain books (and Anil does, per Sec 44AA), Schedule BP opens with a P&L summary section. You enter:

• Revenue from operations — net F&O P&L from your broker's tax statement, or your books if you reconcile broker-by-broker
• Other income — usually zero for a pure F&O trader (any bank interest goes under Schedule OS instead, not here)
• Total revenue
• Expenses — STT, brokerage, exchange transaction charges, SEBI turnover fee, GST on charges, internet/data subscription pro-rata, depreciation on the trading laptop (if you claim it as a business asset)
• Net profit before tax

A critical point: if your broker's tax P&L statement already nets STT and brokerage out of the P&L figure (most do — Zerodha, AngelOne, Kotak all do this in their consolidated tax reports), do not deduct STT and brokerage again here. That is the most common double-counting error in Schedule BP. Check your broker's report carefully: if the headline P&L line is described as "net of charges" or similar, the netting is already done.

Part B / C: where F&O slots in

Schedule BP organises business income into sub-rows by character. F&O on a recognised exchange goes into the non-speculative business income row. Here is the mapping for the instruments Anil and most retail traders touch:

The non-speculative row is where Anil's ₹8L lands.

Part C: allowable deductions

The deductions an F&O trader claims fall into two statutory buckets:

• STT on F&O — deductible u/s 36(1)(xv) as a specific provision for traders. Sec 88E used to rebate STT instead of allowing deduction, but that section was withdrawn from AY 2009-10. Since then, STT is a normal business expense — claim the deduction, not the rebate.
• Brokerage, exchange transaction charges, SEBI turnover fee, GST on charges, internet/data subscription pro-rata, depreciation on trading laptop — all deductible u/s 37(1) as ordinary business expenditure incurred wholly and exclusively for the F&O business.

The "wholly and exclusively" test matters for shared-use items. A laptop used 70% for F&O and 30% for personal browsing allows 70% of the depreciation, not 100%. Most retail traders document this with a simple usage log if challenged.

Double-counting trap. If your broker tax P&L already nets STT and brokerage, do not enter them again as expenses under Part C. Read the broker statement carefully: the headline P&L figure on a Zerodha Tax P&L, AngelOne SmartReports, Kotak Securities tax P&L or Groww Capital Gains Report is net of charges. Adding them back here understates your income.

Part E: turnover declaration

Schedule BP Part E asks for your aggregate turnover under each business head. For F&O, this is the figure we computed under the ICAI Guidance Note 2022 method — the absolute sum of P&L on each closed leg, with no premium addition for options.

Anil's turnover for FY 2025-26 is ₹18,00,000 (worked out in detail in our F&O turnover guide). He enters that figure in the non-speculative business turnover row. Part E feeds into the Sec 44AB audit determination — also covered in the turnover guide.

Net F&O business income flows to Part B-TI

After Parts A through E, Schedule BP outputs a single number per business head — Anil's non-speculative business income for the year. For him: ₹8,00,000.

This number flows up to Part B-TI (Total Income summary) as one of the five heads of income, sitting alongside salary, capital gains, house property, and other sources. The slab math runs on the combined slab-rate base in Part B-TTI — but before we get there, we need to walk Schedules CG and CFL.

Schedule CG: where equity gains land

Anil sold some equity during FY 2025-26 — both long-term and short-term lots. The numbers from his Schedule CG are:

• LTCG (Sec 112A, equity held > 12 months): ₹1,75,000
• STCG (Sec 111A, equity held ≤ 12 months): ₹50,000

The two rates that apply for FY 2025-26 (post Finance (No. 2) Act 2024):

• LTCG on listed equity: 12.5% on gains above the ₹1,25,000 annual exemption (Sec 112A). The rate was raised from 10% — and the exemption from ₹1L — by Finance (No. 2) Act 2024, effective for transfers on or after 23 July 2024.
• STCG on listed equity: 20% (Sec 111A). The rate was raised from 15% by the same Act on the same date.

Applying these to Anil:

• LTCG tax: (1,75,000 − 1,25,000) × 12.5% = ₹6,250
• STCG tax: 50,000 × 20% = ₹10,000

A note on cross-broker FIFO. If your equity is spread across two or more demats — say Zerodha and Kotak — the ITR-3 long-term vs short-term classification is decided ISIN-by-ISIN, FIFO across all your demats combined. The full mechanics (and where most filers get this wrong) are in our multi-broker tax P&L consolidation guide.

Schedule SI auto-populates from CG. Once you fill Schedule CG with the LTCG/STCG amounts, Schedule SI (Special Income) is populated automatically — you do not fill SI directly on the portal. Schedule SI is where the concessional-rate computation actually runs; CG just sources the gross amounts.

Cross-head set-off — Sec 71. A point worth flagging for readers in the F&O loss scenario: if your F&O year was a loss, Sec 71 allows that business loss to be set off against capital gains (LTCG or STCG) in the same year. So a loss-making F&O year could reduce or wipe out your CG tax bill. Anil has F&O profit, so this set-off does not fire for him — but if your numbers are inverted, work through the Sec 71 set-off before computing CG tax separately. (The same business-loss-vs-salary set-off is not allowed: Sec 71(2A) blocks it. Salary is shielded.)

Schedule CFL: why a blank one still matters

Anil's Schedule CFL is blank. He has no F&O loss in FY 2025-26 (he made ₹8L), and he has no brought-forward business loss from earlier years. He still has to file the schedule — and it is worth understanding why a blank CFL is not the same as an absent CFL.

Sec 72 allows non-speculative business losses (including F&O losses) to be carried forward for 8 assessment years and set off against any business income in those future years. So a ₹4L F&O loss this year could offset ₹4L of F&O profit (or salaried-trader's consulting income, or any other business head) anywhere in the next 8 years. The mechanic is generous.

But it is conditional. Sec 80 read with Sec 139(3) requires that for the loss to be carried forward, the ITR-3 must be filed by the original due date under Sec 139(1). For a non-audit case like Anil's, that due date is 31 July 2026. File on 1 August? You lose the 8-year carry-forward forever. The current year's set-off against other heads (Sec 71) still works on a belated return, but the future 8-year window closes.

Even though Anil has no current loss to carry forward, filing on time keeps his record clean and his future options open: if FY 2026-27 is a bad year, his fresh loss will start a clean 8-year clock from that year.

The full Sec 72 mechanics — what counts as "the same business," how brought-forward losses interact with current set-offs, the order of set-off when multiple loss pools exist — belong in a dedicated article. Coming soon on the F&O pillar.

Part B-TTI: putting it all together (under new regime)

This is where every schedule number meets the slab table and produces a final tax bill. Walking it step by step for Anil under the FY 2025-26 new regime:

Step 1: Build Gross Total Income

Step 2: Chapter VI-A deductions

The new regime allows only a narrow set: 80CCD(2) (employer NPS contribution) and 80JJAA (new-employee deduction for employers). It does not allow 80C, 80D, HRA exemption, home-loan interest under 24(b) for self-occupied property, or most other deductions a old-regime filer is used to.

Anil has no 80CCD(2) employer NPS contribution and no 80JJAA. His deductions are zero, so Total Income = ₹29,95,000.

Step 3: Split slab-rate income from special-rate income

This is the step that confuses most first-time ITR-3 filers, so it is worth being explicit. Total Income (₹29,95,000) includes LTCG and STCG inside the figure — that is how Sec 80B(5) defines GTI, and the ITR-3 form reflects it. But the slab math does not run on the full Total Income. It runs on the slab-rate residual only, after pulling out special-rate income.

So:

• Special-rate income: LTCG ₹1,75,000 + STCG ₹50,000 = ₹2,25,000
• Slab-rate income: ₹29,95,000 − ₹2,25,000 = ₹27,70,000

LTCG and STCG are then taxed separately on the next lines, each at its own concessional rate. No rupee is taxed twice. The reason LTCG/STCG stay inside Total Income for the threshold tests (surcharge at ₹50L, 87A rebate at ₹12L for new regime, Schedule AL trigger at ₹50L) is that those thresholds are measured against Total Income, not against the slab-rate residual.

Step 4: Slab tax on the slab-rate residual

The FY 2025-26 new regime slabs (Sec 115BAC as amended by Finance Act 2025):

(Anil's slab-rate residual stops at ₹27,70,000, so the 30% slab applies only to ₹3,70,000 of it.)

87A rebate: not available — taxable income exceeds the ₹12L new-regime threshold.

Step 5: Add special-rate taxes

• LTCG: (1,75,000 − 1,25,000) × 12.5% = ₹6,250
• STCG: 50,000 × 20% = ₹10,000

Step 6: Total before cess + cess

Surcharge: nil (income below ₹50L).

Step 7: Adjust for TDS and advance tax

The ₹4,44,340 is the gross liability. Subtract TDS (mostly TDS on salary from Form 16, plus any TDS on interest or dividends from Form 26AS) and any advance tax instalments already paid during the year. If a balance remains, it is paid as self-assessment tax before filing. If TDS + advance tax exceed the liability, the difference comes back as a refund.

Old regime — would it have helped Anil?

For most F&O traders without heavy 80C / HRA / home-loan claims, the new regime is the better choice. Anil's old-regime computation (with std ded ₹50,000, 80C ₹1,50,000 and 80D ₹25,000 assumed) lands at approximately ₹6,39,340 — about ₹1,95,000 more than new regime. The old regime starts to win only when total Chapter VI-A deductions plus HRA exemption plus 24(b) home-loan interest combined cross roughly ₹4–5L. A pure salaried-plus-F&O profile like Anil's rarely gets there.

If you do want to opt out to old regime, the gateway is Form 10-IEA under Sec 115BAC(6) — a one-time switch with a narrow window each AY. The full decision matrix belongs in a dedicated budget-pillar article. Coming soon.

Frequently asked questions

Q: Is ITR-3 mandatory if F&O is just a side activity? A: Yes. Sec 43(5) proviso (d) classifies F&O as non-speculative business income, and any income (or loss) under "Profits & Gains from Business or Profession" mandates ITR-3 — regardless of size, and regardless of whether you also have salary or capital gains. There is no minimum F&O turnover below which you can stay on ITR-1 or ITR-2.

Q: At what rate is my F&O profit taxed? A: At your slab rate (combined with salary and other slab-rate income), not at the 20% STCG or 12.5% LTCG concessional rates. F&O is business income, not capital gains, so it lands in your slab tax base. For a salaried trader with ₹20L salary plus ₹8L F&O profit, the top rupee of F&O profit is typically taxed at 30% under new regime FY 2025-26.

Q: Can my F&O loss offset my salary income? A: No for the current year — Sec 71(2A) bars any business loss from being set off against salary income. Yes for future years' business income (including next year's F&O profit) — Sec 72 allows carry-forward up to 8 assessment years, but only if you file ITR-3 by the original due date u/s 139(1). A belated return preserves the loss for the current year only, not for CF.

Q: Do I have to fill Schedule BP if my F&O loss was tiny? A: Yes. Any F&O activity in the year — profit or loss, however small — mandates Schedule BP and the move to ITR-3. There is no de minimis threshold. Filing Schedule BP at a small loss is also the only way to preserve that loss for carry-forward under Sec 72.

Q: When is my ITR-3 due if I don't need a tax audit? A: 31 July of the assessment year — so 31 July 2026 for FY 2025-26. Filing by this date is also the only way to preserve any current-year F&O loss for the 8-year carry-forward window under Sec 72. If your case triggers Sec 44AB audit (covered in our F&O turnover article), the due date extends to 31 October.

Further reading

• F&O turnover and tax audit guide — Article #7, where Anil's ₹18L turnover came from
• Multi-broker tax P&L consolidation — for F&O across multiple demats
• Zerodha tax P&L guide — where most F&O numbers originate
• Section 64(1A) minor income clubbing — relevant if a minor account has F&O activity
• Budget changes FY 2025-26 — coming soon

This article reflects rules as of FY 2025-26 (Budget 2024 amendments and Finance Act 2025). Tax laws change yearly — always confirm with your CA or the income-tax portal before filing.