Trading Platforms

NSE Options chain for all futures and options contracts – Fyers One

There is a lack of awareness when it comes to trading tax. Trading in goods is one thing but when you are trading in shares or securities, it is a whole new world. NSE reported a whooping transaction volume of Rs. 64,825,834 crores in F&O deals in the FY 2015-16. This clearly indicates how F&O trading is ruling the securities market. In collaboration with Cleartax, Fyers now offers you a free trading account on its next generation trading platform Fyers One which has advanced charting tools, technical screeners and plenty of resources to help you trade in stocks and derivatives with ease. Further, you can experience the same goodness on your mobile device with the Fyers Markets app.

Now, many times the traders find themselves at crossroads when it comes to reporting their transactions to the tax department in form of Income Tax Returns and end up receiving the notice from the department. The income from trade in shares or securities is taxed under the head ‘profit from Business or Profession’ or ‘income from Capital Gains’ depending upon the case. We shall limit the discussion to trading in F&O in this article.

F&O i.e Futures & Options is the most popular form of derivatives. Derivatives are basically the instruments which don’t have a value of their own, they derive their value from the underlying assets which keeps on fluctuating. The income from such deals are taxed as business income irrespective of the volume or turnover and ITR 4 i.e detailed form for reporting business income is to be filed. Even if you are a salaried individual, you need to choose form ITR-4 if you have engaged in F&O trading at any time during the previous year (AY-2016-17).

Business is categorized by the tax department as speculative & non-speculative. Activities like gambling, horse race, intraday trading etc. are speculative activities and F&O trading is treated as non-speculative business and hence normal tax compliances apply as they apply to any other form of business.

Maintenance of Books of accounts:

All the transaction that are carried out, are required to be recorded which include buy/sell transactions, expenses like electricity bills, demat charges, phone bills etc. In case a trader is involved in multiple forms of trading in shares like intraday trading, F&O, making investments in MFs, holding shares for more than twelve months from the date of purchase, the business income from each of these must be shown separately since the tax treatment differs based on the type of dealing. The common expenses can be bifurcated on a reasonable basis like the proportion of overall time spent on the various types of trades.

How to calculate your trading turnover?

The turnover in case of F&O trading business is calculated in the manner below:
· For every trade contract notes are issued which show the full value of assets bought or sold. While for the recording purpose only the difference amount is used.
· The premium received on sale of contracts is also included in the turnover. For eg. A trader engaged into 2 transactions:
1. He bought one lot of Adani ports at 2.0 lac and sold it for 2.8 lac (profit = .8lac)
2. He bought one lot of Infosys at 3.5lac and sold it for 3.00 lacs.(loss=.50lac)
The turnover shall be computed as (.80 + .50)lacs i.e Rs. 1.30 lacs being the sum of the net differences plus the premium received on sale of contracts.

Tax Computation for Arun – F&O Trader

Let’s take the case of Arun – Arun works with XYZ ltd and has earned a salary of Rs 15 lakhs in FY 2015-16. Arun picked up F&O basics from his colleague was excited at the prospect of making some extra bucks. He decided to try his hands at F&O trading.
Arun opened a trading account with a brokerage firm by paying Rs 5,000 as enrollment charges. He has to pay 0.02% as brokerage charges for each F&O trade and paid a total of Rs 98,000 as brokerage charges during the year. He also attended a workshop for F&O beginners organized by the brokerage firm and paid them Rs 7,000 for it. Arun has telephone expenses for the whole year of Rs 36,000 and a review of his past bills indicates about 50% of his bill is towards his F&O trade. Arun spends a significant amount of time researching on the internet which help him improve his trading skills. His monthly internet bill is Rs 1,200. He met a consultant who specializes in F&O and had a dinner worth Rs 2,000. Arun sends an email to ClearTax along with his trading statement for the year. His total turnover is Rs. 1.2 crores and his F&O Loss is Rs. 3 Lakhs. Let’s see what Arun finds out –
• His F&O trades shall be treated as a business. He shall have to file ITR-4 instead ITR-1 that he filed normally
• Arun can claim expenses of F&O from his income (loss), which are directly related to F&O trading
• Losses have tax benefits
• Since Arun’s turnover is more than Rs 1 crore, he must get an audit done. He also has to maintain books of accounts for his business

Let’s help Arun draw up details of his expenses:

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F&O trading is considered as a non-speculative business and therefore its losses are allowed to be set off from other incomes such as rental income, interest income (set off not allowed salary). Any loss which is unadjusted (Rs 14,000) here can be carried forward to 8 succeeding years. In these 8 years it can only be set off against non-speculative business income.

When is audit mandatory?

When the turnover from F&O trading exceeds Rs. 1crores or if your profit is less than 8% of the trading turnover (and your other income is above taxable limit), the accounts need to be audited by a practicing Chartered Accountant.

Treatment of losses from the F&O trading business and how it affects tax liability?

When there are losses, people conveniently omit on reporting them in their tax returns mostly out of ignorance. The fact is that reporting the losses can help you bring down the tax liability. Since F&O trading is counted as a non-speculative business, loss from F&O trading is allowed to be adjusted against income from any other source (except salary income). The thing to be noted is that Loss from a speculative business cannot be set off against any income other than income from a speculative business.

If the loss is not fully adjusted it can be set off against income under any other source like ‘Income from House Property’, ‘Income from Capital Gains’ etc except under the head “Salaries”. If the loss can still not be adjusted fully in the year in which it was incurred, the unadjusted loss can be carried forward for next eight years immediately succeeding the year in which it was incurred and be set off only against the head ‘profit and gains of business and profession’ for non-speculative business provided the income tax return has been furnished on or before the due date.

What can be the consequences on non-compliance?

· Penalty of amount upto Rs. 25,000 for not maintaining proper books of accounts.
· Penalty of 1.5 % of the turnover or maximum penalty of Rs. 1.5 lacs for not getting the accounts audited before the specified date.(Relevant date is 17th October 2016 for the FY 2015-16).

File your returns with ClearTax and get 20% off along with a Free Trading Account with Fyers.

Author Bio:
Author is a chartered accountant at ClearTax with over 10 years of experience in taxation and finance. ClearTax is India’s largest efiling service for individuals and businesses.


  • Avatar Chetan says:

    I couldn’t refrain from commenting. Very well written! Please bring this feature on the web. I think it is much more useful than FYers One.

    • Tejas Khoday Tejas Khoday says:

      Hi Chetan! Yeah, that’s doable in the future. LEt’s see. Too many things on the plate right now. 🙂

  • Avatar Chatur says:

    Tejas you’re Fyers Web is a too good platform. Please introduce this on the web please.

  • Avatar Manas says:

    Hi ,

    Where i can get every 5 minutes bank nifty option chain historical data ? Kindly suggest .

    I am ready to purchase if any vendor available .


    • Tejas Khoday Tejas Khoday says:

      Hi, there are hardly any data vendors in India who save this data because it is extensive and consumes a lot of memory. Also, there is a lack of demand so it doesn’t make commercial sense. I suggest you contact registered data vendors and see if they have it.

  • Avatar Yatin says:

    Yes I admit this is useful.. but please add options greeks also in this same tool if possible.

  • Avatar Sandeep says:

    Very happy to know you reduced brokerage. Pleasant email. thank you.

  • Avatar Hardik says:

    How is this useful to a beginner?

  • Avatar Rupesh says:

    Are you making this on web platform too? I am hearing many things about Fyers Web in my WhatsApp groups but want to know when is the launchd ate.

  • Avatar intraday_technicals says:

    Good going Fyers for reducing brokerage by 80 percent before GST got launched. Thank you for once some broker is thinking about the retail traders.

  • Avatar Ekant says:

    Hi, nice post. When are you launching Fyers Web? Your customer support guys are not giving a date.

    • Tejas Khoday Tejas Khoday says:

      It’s launching in July! We’ve not given a date yet. Beta testing is on and will roll it out soon :-). You’ll receive mail regarding this soon.

  • Avatar amar says:

    It will be more better if option greeks are displayed in option chain and greeks of option portfolio is displayed.
    request to look into .

    • Tejas Khoday Tejas Khoday says:

      Hi Amar, Well, it was made after taking feedback from users who preferred it this way. Thanks for your feedback.

  • Avatar Amibroker_data says:

    Y r u giving everything for free and ruining the industry? Where will normal ppl go who are selling data and basic software. You are playing wrong game.

    • Tejas Khoday Tejas Khoday says:

      Hey, we don’t see it that way. Our focus is the end client and we’re doing our best to give traders a great experience. And since we are a registered stockbroker, we can provide data to our clients for free, just as others. The only difference is that we work on our platforms.

  • Avatar $Mahesh$ says:

    I appreciate Fyers after seeing many brokers only wish I can export live data to excel.

  • Avatar Hussain says:

    You guys are giving free, free, free and ruining the industry. Tell me just because you help traders save few thousand rupees does not guarantee that they will make profits right???

    • Tejas Khoday Tejas Khoday says:

      We’re just helping traders make the most of the markets. Our job is to make it possible for our clients to do well in the competitive environment of the stock markets.

  • Avatar Raam says:

    Good job Fyers.. wish this was available on web instead of softeare.

  • Avatar Nimesh says:

    Excited to use Fyers One.. but account opening taking more than 2 days.. was keen to short bank nifty options on weekly expiry.

    • Tejas Khoday Tejas Khoday says:

      Hi Nimesh, once your docs are submitted we activate your trading account the same day. Delay is caused due to IL&FS demat account. But since yours is a derivative trade, you can start.

  • Avatar Rubesh says:

    Cool.. In tamil we call it Nalla velai! Saved me some money.

  • Avatar kamal says:

    Impressed by Fyers Platform features. Must congratulate you for the good work Tejas.

  • Avatar Tyagi Ramesh says:

    Fyers, I want to ask Why can’t you persuade NSE to to launch this feature soon. The way international currencies have been moving, it is missed opportunities for us..

    • Tejas Khoday Tejas Khoday says:

      We are one among the many brokers and unless formally communicated by the exchange, we can’t really do much about it. It’s a waiting game.

  • Avatar TraderHari says:

    Nice post. I was checking continuously this blog and I am impressed with your platform. Extremely helpful I was looking for this kind of option in trading for long time. Using nseindia for this everytime is a piss off.Thanks TEjas & Team for your efforts.

  • Avatar Jocelyn says:

    I would like to know if you offer training for new trader?
    Or how a beginner would learn trading option.

  • Avatar SONJOE JOSEPH says:

    Dear Thejas,

    I’m in the process of becoming your client and have already courierd my documents. I would like to know can the option chain be linked to our excel sheet for mathematical calculations. Since some were i have seen the option. If you know just teach me how to do it. Please also include all the IV ‘s of each strike price in the option chain since ie very important.

    For further doubts can i have your email id.


    Sonjoe Joseph.

  • Avatar Jha says:

    Wow now this is something new I have seen in any trading platfrom.. Didn’t knoe this was there in Fyers one

    • Tejas Khoday Tejas Khoday says:

      Hi, yeah we figured we’d have to write about it. Guess there are too many features inbuilt in Fyers One :-). Suggest you take time and explore other posts too.

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