ITR Filing for Capital Gains — A Simple Guide

03 August 2026 · 5 min read

If you sold shares, mutual funds, or property during the year, your regular ITR-1 no longer applies. Capital gains are reported in ITR-2 (for salaried and other non-business taxpayers) or ITR-3 (if you also have business or professional income, including F&O trading, which is treated as business income rather than capital gains).

How the gains are taxed

• Listed equity and equity mutual funds held over 12 months are long-term. Long-term equity gains above the exempt limit of ₹1.25 lakh a year are taxed at 12.5%; short-term equity gains are taxed at 20%.
• Property held over 24 months is long-term. Long-term property gains are generally taxed at 12.5% without indexation; short-term gains are added to your income and taxed at slab rates.
• Debt mutual funds purchased after 1 April 2023 are taxed at slab rates irrespective of holding period.

Documents to keep ready

Broker capital-gains statements (most brokers export a tax P&L), demat statements, purchase and sale deeds for property along with improvement-cost proofs, Form 26AS and the Annual Information Statement (AIS). Reconciling your broker statement against AIS before filing avoids the most common mismatch notices.

Exemptions worth knowing

Reinvesting long-term property gains in another residential property (Section 54) or in specified bonds within six months (Section 54EC, up to ₹50 lakh) can reduce or eliminate the tax. The reinvestment windows are strict, so plan the sale and purchase dates together.

Deadlines and slip-ups

The due date for non-audit taxpayers is 31 July of the assessment year. Common mistakes include reporting net figures instead of scripwise details where required, missing the quarterly breakup needed for interest calculations under 234C, and forgetting to carry forward losses — a capital loss can be carried forward eight years, but only if you file on time.

Unsure about your computation or regime choice? Post your case on Sahi Advise and a verified tax expert will file it right the first time.