How to Save Tax on Intraday Trading: A Real Talk Guide

Intraday trading can feel like a fast-paced game, full of adrenaline and split-second decisions. But when tax season rolls around, things can get a little less exciting and a lot more confusing. If you’re actively buying and selling stocks within the same day, you’re considered an intraday trader by the taxman—and yes, your profits (and losses) are taxable.

The good news? There are smart, legal ways to reduce your tax burden and keep more of your hard-earned profits. Let’s break it down, plain and simple.

First, How Is Intraday Trading Taxed in India?

In India, profits from intraday trading are treated as speculative business income. That means:

• It falls under the head “Income from Business or Profession.”
• You’ll need to file an ITR-3 form.
• The income is taxed according to your income tax slab—no flat rates here.

So if you’re earning a lot from intraday trading, you might also be bumped into a higher tax bracket. But don’t worry—here are some ways to soften the blow.

1. Claim Business Expenses

Since intraday trading is treated like a business, you can claim relevant expenses to lower your taxable income. These may include:

• Internet and mobile bills (especially if you trade on your phone)
• Brokerage fees and transaction charges
• Cost of software, tools, or subscriptions used for trading
• Office rent (if you’ve set up a dedicated space)
• Even electricity bills if you're trading from home

Just keep proper documentation and receipts—you’ll need them if the tax department asks.

2. Set Off Losses Smartly

Intraday trading losses happen, and the silver lining is—you can use them to offset your profits:

• Speculative losses (from intraday trading) can be carried forward for up to 4 years.
• But you can only set them off against speculative gains (not other types of income).

Still, it’s better than letting those losses go to waste. Use them strategically.

3. Maintain Proper Books of Accounts

Even if you’re not running a full-fledged trading business, maintaining detailed records can help:

• Daily profit/loss reports
• Brokerage statements
• Expense logs
• Contract notes

This not only makes filing taxes easier but also keeps you protected in case of a tax audit.

4. Consider Presumptive Taxation (If You Qualify)

Under Section 44AD, certain small businesses can opt for presumptive taxation, where income is assumed at a flat rate (usually 6% of turnover). But there’s a catch:

• Speculative income from intraday trading does not qualify for Section 44AD.
• You’ll need to go with regular ITR-3 filing.

So this option is off the table for intraday, but good to know if you’re also doing delivery-based trades or have other business income.

5. Hire a Tax Professional

Trying to handle trading taxes yourself can be like repairing a car by learning tricks from YouTube video. Sure, you might figure it out… but one wrong move and things get messy. A CA or tax expert who understands trading can help you:

• Maximize your deductions
• File the right ITR
• Avoid red flags with the IT department

Think of it as an investment in peace of mind.

Final Thoughts :-

Intraday trading can be thrilling, but taxes? Not so much. Still, a little tax planning can go a long way in protecting your gains. By tracking expenses, recording losses, and filing smart, you’re not just playing the market—you’re playing it wisely.

So go ahead, ride the intraday waves—but don’t let taxes wipe out your wins.