Which ITR should I file as a government employee and intraday option buyer?

Use this tool to find out the tax audit applicability. My first hand assumption is that you would need a tax audit. You can get to a CA via Quicko.

Use this tool to find out your ITR form. Again my assumption is that you will need ITR 3

Central govt employees are restricted from taking f&o trades. Not sure about your state govt service rules.

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What if I don’t want to carry forward loss and close my trading and demat account? Should I still go with Itr 3? Or I can go with itr 1 that I usually do every year?

Depending on your turn over you can look into persumptive taxation scheme Section 44AD – Presumptive Scheme to be opted for atleast 5 years

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I think government employees are prohibited from speculative trading. You can buy securities for short term or long term. But I think there are restrictions in intraday trading. You can refer this article :


This is for central government employees. State govt employees may have different code of conduct.

Someone from Zerodha has said that this rule applies to state government employees as well. Basically anyone who might have access to insider information.

The said code of conduct is as per

In here government means central government.

State govt employees have their respective code of conduct rules.

Assuming he is from West Bengal, this is the code of conduct for West Bengal state government employees:

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If so he should adhere by it.


Yes. you need to disclose loss and need an audit.

Contact a reliable CA, they will ensure audit compliance. No need to fear for an audit.

The consequences wil be as mentioned in the respective employment agreements or the state Act whichever is applicable. Nothing to do with income tax.

You may get away this year but make sure you don’t continue it in future.

  1. You must mandatorily show losses in stock market trading in ITR returns.

  2. If you are a state govt employee, get in touch with rule book while you joined the job. You should not be allowed to do trading since it is a business. However you can do investing. Better option would be to do it on your mother’s or wife’s name.

  3. You should fill ITR3 or ITR4. However, in ITR4, you can’t carry forward your loss to next year.

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My thinking/understadning is this:

  1. Only Intraday trading in equity is not allowed
  2. IF you are option buyer/seller, you could say that you took position as a hedge to your portfolio without any issue (even if it is a business).

Better way would be to trade in your wife/mother a/c.

If you do not wish to carry forward losses, then show it as presumption income (depending on the turn over) and close it.

Plz. do check with your CA.


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Thanks for valuable suggestion

Same here, i file itr3

So government considers trading in capital market as gambling. Then why isn’t it banned. Private people can gamble but government people are not allowed.

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Because government officials or employees are often privy to insider information. That way they can get unfair advantages. That is why short term speculative participation is prohibited. Not because they think that it is gambling. You can invest for long term. In fact it is the same scenario in many developed nations. Not only in India.


I think as per income tax act trading in F&O is considered as non speculative. As it can be done for risk mitigation and hedging purpose. That speculative trading is related to intraday stock trading only.

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If you are a government employee, please get clarification from your department regarding this.

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F&O income is treated as business income. A govt servant is not allowed to engage in a business while in service.