Can You File F&O Losses of FY 22-23 and FY 23-24 in ITR 2024-25? A Definitive Guide

By FnOTax India Editorial Board · Updated 2026-05-29 · F&O Loss

Source basis: This research draft is checked against listed official sources where available. It is educational guidance, not personalized tax advice.

If you read most tax blogs today, you might walk away believing a dangerous myth: that you can simply lump your missed Futures & Options (F&O) losses from FY 2022-23 into your current FY 2023-24 tax return, or that you can freely mix your intraday equity losses with your F&O profits.

This is flatly incorrect. Attempting to club multiple financial years into a single ITR is a guaranteed way to trigger a defective return notice from the Income Tax Department.

Every tax season, traders face immense deadline anxiety. As one trader recently posted in a community forum: “If an audit is applicable to an individual, the last date to file an audit report is 30 September, and to file the return is 31 October… what are the consequences if tax audit is not done?”

If you are wondering, “Can I file F&O loss/profit of FY 22-23 and FY 23-24 in the current year ITR 2024-25?”, this guide will give you the definitive, legally accurate answer. We will separate the rules for carrying forward previously declared losses versus trying to report missed past-year transactions, and show you exactly how to file your ITR-3.

The Short Answer: No Clubbing Allowed

You cannot combine or club transactions from FY 2022-23 (Assessment Year 2023-24) and FY 2023-24 (Assessment Year 2024-25) as if they happened in the same year.

The Income Tax Act strictly compartmentalizes financial years. Your current ITR (AY 2024-25) is exclusively for reporting trades executed between April 1, 2023, and March 31, 2024.

However, how you handle FY 2022-23 depends entirely on whether you filed your tax return on time last year. Let’s break down the two possible scenarios.

Scenario A: You Filed FY 2022-23 On Time (The Right Way)

If you incurred an F&O loss in FY 2022-23 and filed your ITR-3 before the original due date under Section 139(1), you are in a great position.

Under Section 43(5) proviso (d) of the Income Tax Act, trading in derivatives (F&O) on a recognized stock exchange is classified as a non-speculative business. Because it is a non-speculative business loss, Section 72 allows you to carry this loss forward for up to 8 assessment years.

How it works in your current ITR (AY 2024-25):

  1. You will report your FY 2023-24 F&O profits in the current ITR-3.
  2. You will use Schedule BFLA (Brought Forward Loss Allowance) to pull your legally declared FY 2022-23 losses into the current year.
  3. The old loss will be set off against your current year’s business income, reducing your total taxable income and saving you tax.

Note: F&O losses can be set off against any income EXCEPT salary in the same year (Section 71), but once carried forward to a new year, they can only be set off against business income.

Scenario B: You Missed Filing FY 2022-23 (The ITR-U Trap)

What if you made a loss in FY 2022-23 but didn’t file an ITR, or filed an ITR-1 and hid your trading activity? Can you declare those old losses now?

No. You have lost the right to carry forward those losses.

To carry forward a business loss, filing the return before the original deadline is mandatory. Many traders think they can use an Updated Return (ITR-U) under Section 139(8A) to fix this. This is a dangerous misconception.

The law explicitly states that an ITR-U cannot be filed to:

  • Declare a fresh loss.
  • Increase a previously declared loss.
  • Claim a tax refund.

ITR-U is strictly a mechanism for the government to collect more tax, not to grant you missed benefits. Furthermore, filing an ITR-U without professional help often leads to disaster. Take this real complaint from a trader who tried to fix a past year:

”- Sir, I had filed ITR U of AY 2023-24 and by mistake I changed regime old to new due to this I have gotten demand.”

The Legal Workaround: If you had profits in FY 2022-23 that you missed reporting, you must file an ITR-U to declare them and pay the late taxes plus a 25% or 50% additional tax penalty. But if you had losses, those FY 2022-23 losses are legally dead. You must simply move on and accurately file your FY 2023-24 trades in the current ITR-3.

Busting the Biggest F&O Tax Myths

Before you file your current year ITR, we must correct several widespread errors found on other tax websites.

Myth 1: You can set off intraday equity losses against F&O profits.

The Truth: Intraday equity trading (where no delivery is taken) is classified as a speculative business. F&O is non-speculative. Under the law, speculative losses can only be set off against speculative profits. If you made ₹2 Lakhs in F&O and lost ₹1 Lakh in intraday equity, you must pay tax on the full ₹2 Lakhs. The ₹1 Lakh intraday loss will be carried forward.

Myth 2: All trading losses can be carried forward for 8 years.

The Truth: Non-speculative losses (F&O) can be carried forward for 8 years. Speculative losses (Intraday equity) can only be carried forward for 4 years (Section 73).

Myth 3: The presumptive taxation limit is ₹2 Crores.

The Truth: The Section 44AD turnover limit was raised from ₹2 crore to ₹3 crore (effective FY 2023-24 onwards), provided your cash receipts and payments do not exceed 5% of total turnover.

Handling FY 2023-24: Turnover, Audits, and ITR Forms

For your current year trades (FY 2023-24), you must determine your turnover to see if a tax audit is required.

1. Calculating F&O Turnover (The ICAI 8th Edition Rule)

Do not calculate turnover by adding up your total buy and sell contract values. As per the authoritative ICAI 8th Edition Guidance Note on Tax Audit u/s 44AB (issued August 2022), F&O turnover is calculated as: Sum of Absolute Profits + Sum of Absolute Losses for each trade. (Note: The old rule of adding the premium received on options writing separately has been scrapped. Do not add it again).

2. Tax Audit Applicability (Section 44AB)

Under Section 44AB(a), a tax audit is mandatory if your business turnover exceeds ₹1 crore. However, this threshold is raised to ₹10 crore if your cash receipts and cash payments each do not exceed 5% of the total. Since F&O trading is 100% digital, the ₹10 crore threshold effectively applies to almost all traders.

The Section 44AD(4) Trap: If you opted for presumptive taxation (declaring 6% profit on turnover) in any of the last 5 years, and this year you decide to opt out (because you have a loss or sub-6% profit), a tax audit becomes mandatory under Section 44AB(e) if your total income exceeds the basic exemption limit. You will also be barred from re-entering the 44AD scheme for the next 5 years.

3. Which ITR Form to Use?

F&O traders must file ITR-3. You can only use ITR-4 if you are opting for the Section 44AD presumptive scheme AND you have no capital gains, no foreign assets, and total income below ₹50 lakhs. For 99% of active traders, ITR-3 is the only correct form.

4. Books of Account (Section 44AA)

You are legally required to maintain books of account if your business income exceeds ₹1.2 lakh OR your turnover exceeds ₹10 lakh in any of the last 3 years. For F&O, this means keeping your broker’s ledger, P&L statement, and contract notes safe.

Step-by-Step: Reporting Brought Forward Losses in ITR-3

If you are carrying forward a valid FY 2022-23 loss into your FY 2023-24 return, here is how to route it through ITR-3:

  1. Schedule BP (Business & Profession): Enter your current year (FY 23-24) F&O profits or losses here.
  2. Schedule CYLA (Current Year Loss Adjustment): If you have current year losses in one business, they will be set off against other current year income (except salary) here.
  3. Schedule BFLA (Brought Forward Loss Allowance): This is the magic schedule. Your previously filed FY 22-23 F&O losses will appear here. The system will automatically set them off against your current year Schedule BP profits.
  4. Schedule CFL (Carry Forward of Losses): Any remaining unabsorbed losses (from past years or the current year) will be parked here to be carried forward to AY 2025-26.

Worked Example: Real Numbers

Let’s look at a practical scenario for AY 2024-25:

  • FY 2022-23 (Past Year):
    • F&O Loss: ₹3,00,000 (ITR-3 filed on time before July 31, 2023).
  • FY 2023-24 (Current Year):
    • F&O Profit: ₹5,00,000
    • Intraday Equity Loss: ₹1,00,000
    • Salary Income: ₹8,00,000

Tax Calculation for AY 2024-25:

  1. Intraday Loss: The ₹1,00,000 intraday loss is speculative. It cannot be set off against F&O or Salary. It goes straight to Schedule CFL to be carried forward for 4 years.
  2. F&O Profit: Current year profit is ₹5,00,000.
  3. Brought Forward Set-off: We bring forward the ₹3,00,000 F&O loss from FY 22-23 (via Schedule BFLA) and set it off against the ₹5,00,000 profit.
  4. Net Taxable Business Income: ₹5,00,000 - ₹3,00,000 = ₹2,00,000.
  5. Total Taxable Income: ₹8,00,000 (Salary) + ₹2,00,000 (Business) = ₹10,00,000.

As you plan your tax compliance, be aware of the strict deadlines and penalties enforced by the Income Tax Department.

For non-audit cases, the ITR-3 deadline is typically July 31 (though occasionally extended, such as the August 31 extension noted in the Finance Act 2026 for AY 26-27). If a tax audit applies to you, the Tax Audit Report (Form 3CA/3CB-3CD) is due by September 30, and the ITR-3 is due by October 31.

Missing a Tax Audit: Under Section 271B, failing to file a required tax audit results in a penalty/fee of 0.5% of your turnover OR ₹1,50,000, whichever is LOWER. (Note: Finance Act 2026 officially converted this from a ‘penalty’ to a ‘fee’ status to reduce litigation, but the financial hit remains exactly the same).

Conclusion

To answer the core question: You cannot file FY 2022-23 and FY 2023-24 transactions as a single combined entity in your current ITR. Financial years are sacred in tax law.

If you filed your FY 22-23 losses on time, bring them forward proudly using Schedule BFLA. If you missed filing them, accept that the losses are gone, avoid the ITR-U trap, and focus on filing your FY 23-24 trades accurately in ITR-3.

Tax laws regarding derivatives are complex and highly scrutinized by the IT Department. Always consult a qualified Chartered Accountant to ensure your turnover calculations and audit applicability are perfectly compliant.

Frequently Asked Questions (FAQs)

1. Can I club my missed F&O losses from FY 2022-23 into my FY 2023-24 ITR? No. Financial years are strictly compartmentalized. You cannot declare missed transactions from a previous year as current-year transactions. If you missed filing FY 2022-23, you cannot claim those losses now.

2. Can I use an Updated Return (ITR-U) to declare missed F&O losses from last year? You can file an ITR-U under Section 139(8A) to report missed income, but you cannot use it to declare fresh losses, carry forward losses, or claim a refund. It is strictly for paying additional tax.

3. Can I set off intraday equity losses against my F&O profits? No. Under Section 43(5), intraday equity trading is a speculative business, while F&O is non-speculative. Speculative losses can only be set off against speculative profits.

4. What is the F&O tax audit turnover limit for AY 2024-25? Under Section 44AB, the base limit is ₹1 crore, but it is enhanced to ₹10 crore if your cash receipts and payments are less than 5% of total transactions. Since F&O is 100% digital, the ₹10 crore limit effectively applies.

5. How is F&O turnover calculated for tax audit purposes? As per the ICAI 8th Edition Guidance Note (Aug 2022), F&O turnover is the sum of absolute profits and absolute losses for each trade. Premium received on options writing is no longer added separately.

Official sources

Source basis: The references below point to the official Indian tax sources used to inform this article. The article has not completed our full source-verification review; treat it as educational guidance only and consult a qualified Chartered Accountant before acting on it.