Are NIFTY options business income?

Yes. Exchange-traded index options are generally non-speculative business income and reported in ITR-3.

Does option premium count in turnover?

For AY 2026-27 under GN 2025, option-sale premium must be considered unless already netted in trade-level P&L.

Does BANKNIFTY option loss carry forward?

Yes, as non-speculative business loss for 8 years if the return is filed on time.

Are NIFTY options business income?

Yes. Exchange-traded index options are generally non-speculative business income and reported in ITR-3.

Does option premium count in turnover?

For AY 2026-27 under GN 2025, option-sale premium must be considered unless already netted in trade-level P&L.

Does BANKNIFTY option loss carry forward?

Yes, as non-speculative business loss for 8 years if the return is filed on time.

AY 2026-27 NSE / BSE index options

Index options tax filing.

Index options are where most retail F&O volume sits — and where turnover mistakes are most expensive. The key AY 2026-27 issue is option-sale premium: whether your broker report includes it correctly under ICAI GN 2025.

Calculate turnover All segments

Income classification

s.43(5)

NIFTY, BANKNIFTY, FINNIFTY, MIDCPNIFTY, SENSEX, and other exchange-traded index options are derivatives business activity, not capital gains for most traders.

Turnover method

ICAI GN 2025

For options, ICAI GN 2025 requires careful handling of premium received on sale of options. Avoid both undercounting premium and double-counting where premium is already embedded in net trade P&L.

Do not use notional value

F&O turnover is not margin, premium paid, or full contract value. Reconcile broker reports against the ICAI method before deciding audit applicability.

Audit applicability

s.44AB

High index-option lots do not automatically mean audit. Audit depends on tax turnover, cash-condition tests, and 44AD history.

Use the audit checker after aggregating all brokers and all derivative segments.

Expenses

Schedule BP

STT, brokerage, exchange fees, GST, data subscriptions, API costs, and strategy software may be deductible if directly linked to trading.

Index options gotchas

Before filing

Option-sale premium is the big AY 2026-27 change

Older calculators often use only absolute P&L. GN 2025 adds option-sale premium unless already reflected in per-trade P&L.

Expiry-day turnover can look misleading

Expiry-day premium decay and high lot counts do not mean notional contract value is turnover. Use tax-audit methodology.

Weekly index options still aggregate annually

Do not compute tax by weekly expiry. Aggregate all FY index-option trades for the business-income and audit tests.

Frequently asked questions

Are NIFTY options business income?: Yes. Exchange-traded index options are generally non-speculative business income and reported in ITR-3.
Does option premium count in turnover?: For AY 2026-27 under GN 2025, option-sale premium must be considered unless already netted in trade-level P&L.
Does BANKNIFTY option loss carry forward?: Yes, as non-speculative business loss for 8 years if the return is filed on time.

Citations

Sources