New ITR-3 rules for F&O traders: Leave these columns blank and risk a defective return

Futures and options (F&O) traders will have to be extra careful while filing their income tax returns this year. The Income Tax Department has introduced new disclosure requirements in the revised ITR-3 form for Assessment Year 2026-27, making it mandatory for derivative traders to separately report their F&O turnover and income.

The Central Board of Direct Taxes (CBDT) notified the revised ITR-3 form on March 30, 2026. One of the most significant changes is the addition of new columns under "Schedule Part A – Trading Account", which did not exist in the previous year's form.

Under the revised format, taxpayers who traded in futures and options during FY 2025-26 will now have to separately disclose:

Turnover from F&O trading; and Income from F&O transactions credited to the profit and loss account.

Tax experts say these disclosures are aimed at improving transparency and enabling better traceability of derivative trading activities.

Sujit Bangar, founder of TaxBuddy, highlighted the changes in a post on X, warning that taxpayers should not ignore the new fields.

"ITR-3 has NEW disclosure columns this year for you. Leave them blank and your return can be flagged as defective," Bangar said.

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A defective return can have serious consequences. If the deficiencies are not rectified within the prescribed period, the return may be treated as invalid, potentially affecting tax compliance and other benefits available to taxpayers.

Intraday traders are also covered under the same schedule. While disclosure of intraday turnover and income was already required in earlier years, the revised form now places both intraday and F&O disclosures together under Schedule Part A – Trading Account.

Audit trail

According to Bangar, the tax department's objective is to create a clearer audit trail for derivative transactions. The move comes amid growing participation in the F&O segment and concerns over investor losses. Data released by market regulator Sebi has shown that nine out of 10 individual F&O traders lose money.

Tax experts note that many derivative traders mistakenly file ITR-4 and omit disclosures that are necessary for business income. Since F&O income is generally classified as non-speculative business income, most traders are required to file ITR-3.

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Revised ITR-3 form

Apart from the new F&O disclosures, the revised ITR-3 form incorporates several other changes.

Taxpayers will now have to explicitly choose between the old and new tax regimes. Since the new tax regime under Section 115BAC is the default option, individuals wishing to opt for the old regime must submit Form 10-IEA before the due date.

The revised form also expands reporting requirements for high-value transactions. Even taxpayers with income below the taxable limit may have to provide details if they deposited more than ₹1 crore in bank accounts, spent over ₹2 lakh on foreign travel, or incurred electricity expenses exceeding ₹1 lakh.

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Taxpayers' details

Additional disclosures relating to filing status, residential status and address details have also been introduced. Non-residents will be required to provide information such as foreign tax identification numbers and details relating to their stay in India.

Another important change is the increase in the threshold for reporting assets and liabilities to ₹1 crore, up from ₹50 lakh earlier.

The due date for filing ITR-3 for non-audit cases is August 31, 2026, while taxpayers whose accounts are subject to audit have until October 31, 2026.

Missing the deadline may not only attract penalties but also result in the loss of the ability to carry forward business losses for up to eight assessment years. For F&O traders, experts say accurate and timely filing will be critical this year.

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