Futures and Options (F&O) trading has gone mainstream in India. Yet one question keeps confusing traders: how is F&O turnover calculated, and why does it matter for income tax?
Let’s break it down.
What exactly is F&O turnover?
It’s simply the sum of all profits and losses (absolute values) from derivative transactions in a financial year, not the contract value of trades.
Why not contract value?
In normal business, turnover = invoice value. While in case of F&O, contract value is only notional (for example, a 10 crore Nifty contract).
What actually changes hands is only your profit or loss. Now if contract value was used, even small trades would inflate turnover into crores.
That’s why ICAI had clarified (Point 5.10(b)) in one of their guidance notes in 2023 that:
Turnover = absolute P&L, not notional value.
Why does F&O turnover matter?
Because it affects three things:
1) Applicability of tax audit
Yes, if turnover crosses the Section 44AB threshold.
2) Whether you can opt for presumptive taxation
Yes, if turnover is within the limits mentioned under Section 44AD.
3) Due date for tax filing
The deadline to file ITR depends on whether you’re undergo audit or not.
| Case | Due date (AY 2025-26) |
|---|---|
| Non-audit | September 15, 2025 |
| Audit | October 31, 2025 |
How to calculate F&O turnover?
Here’s how you can calculate your F&O turnover:
- Take the absolute profit or loss from each trade
- Add them all up → that’s your turnover
Example:
- Trade 1 → Profit 30,000 → add 30,000
- Trade 2 → Loss 20,000 → add 20,000
Turnover = 50,000
Turnover amount can be higher than net profit because losses are added as positives.
What has ICAI said about turnover?
As per the ICAI 2023 Guidance Note, the turnover of derivatives, futures and options is to be determined as follows:
| Point no. in guidance note | ICAI text | Explanation |
|---|---|---|
| 1 | “The total of favourable and unfavourable differences shall be taken as turnover.” | Add up all profits and all losses (in absolute terms) from F&O trades during the year. Sum (Absolute Profit + Loss) = turnover. |
| 2 | “Premium received on sale of options is also to be included in turnover. However, where the premium received is included for determining net profit for transactions, then such net profit should not be separately included.” | Option sellers must add premiums received into turnover if it wasn’t considered in calculating Profit/Loss. |
| 4 | “In case of an open position at the end of the financial year, the turnover arising from the said transaction should be considered in the year when the transaction is actually squared off.” | If trades are left open at year-end, don’t count them yet. Turnover will be considered only in the year the trade is closed (squared off). |
| 5 | “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 F&O contracts settled by delivery: add the difference between trade price and settlement price as turnover. If the underlying asset (like shares) is stock-in-trade, then the full sale value of those shares is also turnover. |
Let’s understand turnover calculation with an example
| Trade | Security | Type | Premium paid | Premium received | Buy value | Sell value | Spot value | Profit/(Loss) | Turnover |
|---|---|---|---|---|---|---|---|---|---|
| 1 | Cipla | Futures | N/A | N/A | 9,50,000 | 10,05,000 | N/A | 55,000 | 55,000 |
| 2 | ONGC | Futures | N/A | N/A | 8,50,000 | 8,00,000 | N/A | (50,000) | 50,000 |
| 3 | Nifty | Call - Buy (Squared-off) | 5,000 | 6,500 | N/A | N/A | N/A | 1,500 | 1,500 |
| 4 | BHEL | Call – Buy (Squared-off) | 5,000 | 3,000 | N/A | N/A | N/A | (2,000) | 2,000 |
| 5 | TCS | Call – Buy (Open) | 5,000 | N/A | N/A | N/A | N/A | N/A | N/A |
| 6 | Reliance | Put – Buy (Squared-off) | 5,000 | 7,500 | N/A | N/A | N/A | 2,500 | 2,500 |
| 7 | Reliance | Put – Buy (Squared-off) | 5,000 | 1,500 | N/A | N/A | N/A | (3,500) | 3,500 |
| 8 | TCS | Put – Buy (Open) | 5,000 | N/A | N/A | N/A | N/A | N/A | N/A |
| 9 | IOC | Call – Sell (Expired) | N/A | 500 | N/A | N/A | N/A | 500 | 500 |
| 10 | TCS | Call – Sell (Open) | N/A | 500 | N/A | N/A | N/A | N/A | N/A |
| 11 | IOC | Put – Sell (Expired) | N/A | 500 | N/A | N/A | N/A | 500 | 500 |
| 12 | TCS | Put– Sell (Open) | N/A | 500 | N/A | N/A | N/A | N/A | N/A |
How do brokers calculate turnover in Tax P&L?
In case of futures, it’s summation of the difference between buy value and sell value.
For options, refer to the table below.
| Transaction | Scenario | Purchase Value | Sell Value |
|---|---|---|---|
| Call | Expired | 0 | Premium received |
| Put | Expired | 0 | Premium received |
| Call | Squared-off | Premium paid | Premium received |
| Put | Squared-off | Premium paid | Premium received |
How will the above example look in your broker’s P&L report?
| Trade | Security | Type | Buy Value | Sell Value | Profit/(Loss) | Turnover |
|---|---|---|---|---|---|---|
| 1 | Cipla | Futures | 9,50,000 | 10,05,000 | 55,000 | 55,000 |
| 2 | ONGC | Futures | 8,50,000 | 8,00,000 | (50,000) | 50,000 |
| 3 | Nifty | Call - Buy (Squared-off) | 5,000 | 6,500 | 1,500 | 1,500 |
| 4 | BHEL | Call – Buy (Squared-off) | 5,000 | 3,000 | (2,000) | 2,000 |
| 5 | TCS | Call – Buy (Open) | 5,000 | N/A | N/A | N/A |
| 6 | Reliance | Put – Buy (Squared-off) | 5,000 | 7,500 | 2,500 | 2,500 |
| 7 | Reliance | Put – Buy (Squared-off) | 5,000 | 1,500 | (3,500) | 3,500 |
| 8 | TCS | Put – Buy (Open) | 5,000 | N/A | N/A | N/A |
| 9 | IOC | Call – Sell (Expired) | N/A | 500 | 500 | 500 |
| 10 | TCS | Call – Sell (Open) | N/A | 500 | N/A | N/A |
| 11 | IOC | Put – Sell (Expired) | N/A | 500 | 500 | 500 |
| 12 | TCS | Put– Sell (Open) | N/A | 500 | N/A | N/A |
So, majority of the brokers already factor in premiums received while calculating profit or loss in their P&L reports, hence only the absolute profit/loss figure is treated as turnover.
Hope this helps!