Short term loss with F&O gain & Valid expenses for F&O

Hello All,

I have read varsity module on taxation and have a some idea now about taxing on trading and surprisingly losses can be used to negate profits. But I am still confused on few points,

I know zerodha has a team that helps with tax queries, it would be a great contribution if someone can tag them.

  • Can I use my short term/long term loss to negate profit from F&O? If yes, Can I do it in next years also? example, if I have a loss in 2019-20 can I use it for profit in 2020-21 ?

  • If I have missed to file losses in ITR for 2018-19, Can I do it this year?

  • In an article on cleartax, I read that we can claim expenses that have occurred for F&O trading just like companies do which may include bills, brokerage etc. lets suppose, I have a friend and I pay him commission/fees for his consulting services (say I am learning from him). This payment is mostly in cash/bank transfer. Can this expense be claimed?

Summary for one account, How can I use it?

FY 2018-19 : Not included in ITR last year,
Equity: Small profit
F&O: 1lkh loss

FY 2019-20: Yet to file ITR
Long term Profit: -1.8 Lkh (loss) - Can this be used for F&O gains in 2020-21?
F&0: Small Profit



  1. As per the rules for set-off and carry forward of loss, STCL can be set off against STCG and LTCG and LTCL can set off agains LTCG only. You can carry forward the remaining loss and adjust against future Capital Gains only. Thus, you cannot adjust it with F&O Profit.

  2. For FY 2018-19 (AY 2019-20), the due date to file ITR was 30th September 2019. The last date to file the Belated Return has been extended to 30th September 2020. However, you cannot claim losses in a Belated Return. Therefore, if you have missed claiming losses for FY 2018-19, you cannot claim them now since there due date has already passed.

  3. If you have incurred an expense directly related to trading activity (that you are reporting as business income), you can claim such an expenses as a valid business expense. Further, as per Income Tax Act, a cash expense in excess of INR 10,000 cannot be claimed as an expense.

FY 2018-19 - If you have filed an original return in time, you should file a Revised Return to report equity profit and F&O loss. If you have not filed return at all, you should file a Belated Return to report equity profits and F&O trading. However, you will not be able to claim the loss.FY 2019-20 - Long Term Capital Loss cannot be adjusted with F&O profits since F&O is a Non-Speculative Business Income. You must file an ITR-3 reporting your trading transactions.

If you need help of an expert to file your ITR, feel free to write to us at [email protected]

Hope this helps :slight_smile:

what if f&o turnover of greater than 5cr…which plan should i apply in quicko for itr filing? @quick