How to Report Capital Gains in Your ITR: Shares, Mutual Funds & Property (AY 2026-27 Guide)

Capital gains from shares, mutual funds, property and other capital assets must be reported in Schedule CG of your Income Tax Return (ITR) for AY 2026-27. Depending on your income and transactions, you may need to file ITR-2 or ITR-3. You can also file ITR-1 or ITR-4 if you have only long term capital gains under Section 112A upto ₹ 1,25,000 after fulfilling other conditions. Complete Schedule 112A (where applicable), claim eligible exemptions and reconcile your figures with AIS, TIS and Form 26AS before filing. 

We open our portfolio at the end of the financial year with anticipation but get perplexed with: How do I report all of this capital gains to the Income Tax Department without any compliance errors? 

For AY 2026-27 (FY 2025-26), taxpayers need to carefully apply the revised capital gains tax rates and holding period rules introduced after the 2024 Budget changes.

This guide explains how to report capital gains in your ITR, including how to choose the correct ITR form, tax treatment, exemptions, Schedule CG reporting and key checks to avoid errors in just 14 steps.

Quick Answer

Capital Gains in ITR: Key Takeaway

• Report capital gains correctly in Schedule CG of ITR-2/ITR-3.
• Eligible to file ITR 1/ITR 4 if assessee have only Section 112A LTCG upto ₹ 1.25 lakhs
• Classify assets, holding periods and tax rates accurately.
• Complete Schedule 112A for eligible LTCG.
• Reconcile figures with AIS, TIS and broker statements.
• Claim valid exemptions and report losses correctly.

AY 2026-27 Capital Gains Master Tax Table

Under the updated tax regime applicable for AY 2026-27:

Asset	Holding Period for LTCG	Short-Term Capital Gain (STCG)	Long-Term Capital Gain (LTCG)
Listed Equity Shares	Greater than 12 months	20%	12.5%
Equity-Oriented Mutual Funds	Greater than 12 months	20%	12.5%
Debt Mutual Funds	Always treated as Short Term(Regardless of holding period)	Taxed at your applicable slab rate	Not Applicable
Immovable Property (Land or Building)	Greater than 24 months	Taxed at your applicable slab rate	12.5% (Without Indexation)
Unlisted Shares	Greater than 24 months	Taxed at your applicable slab rate	12.5%

Note:

1. For resident individuals and HUFs who acquired land or buildings before July 23, 2024, the law allows a choice between 12.5% without indexation or 20% with indexation, whichever results in a lower tax liability.

2. The tax rates listed above are exclusive of the health and education cess (4%) and any applicable surcharge based on your total income brackets.

3. Special-rate gains (such as Section 111A STCG and 112A LTCG) do not qualify for the Section 87A rebate under the new tax regime {Finance Act, 2025}. This means that even if you qualify for the Section 87A rebate, you will still have to pay tax on capital gains taxable under Sections 111A and 112A. The rebate cannot reduce this tax under the new regime. However, under the old regime,  rebate is not available against for Section 112A. 

Step-by-Step Guide: Reporting Capital Gains in Schedule CG & Schedule 112A

Filing capital gains in the ITR form is a step-by-step process on the income tax e filing portal. 

Follow this sequence to report capital gains in ITR form:

Step 1: Collect Every Document Before Opening the Income Tax Portal

Depending on what you sold during FY 2025-26, keep the following ready:

Asset	Documents
Listed Equity Shares	Broker Capital Gains Statement
Mutual Funds	Consolidated Account Statement (CAS), AMC Redemption Statement
Property	Purchase Deed, Sale Deed, Improvement Cost Bills, Brokerage Details
Gold	Purchase Invoice, Sale Documents
Foreign Shares	Foreign Broker Statement, Exchange Rates
Cryptocurrency	Wallet Statements
Exemption Claims	Section 54/54F/54EC Investment Documents

Step 2: Prepare the Capital Gains Computation Before Filing

Prepare a detailed capital gains computation as per Income-tax law using your broker’s statement/property records in an Excel/Google Sheet or a tax software. While STT (Securities Transaction Tax) is non-deductible for capital gains, brokerage and stamp duties are deductible transfer expenses.

Support: Beginner’s Guide to Income-tax law in India

Step 3: Reconcile Your Computation with AIS, TIS & Form 26AS

Before filing, compare your step 2 working with the information available in your AIS, TIS and Form 26AS.

If you are unsure about your capital gains computation or which tax provisions to apply, our Income Tax Consultancy Services professionals can review your computation before you proceed with ITR filing. 

Step 4: Decide Whether to File Online or Through the Offline JSON Utility

The IT Department allows taxpayers to file income tax returns using either:

Option 1: Online e-Filing Portal

The online e-filing mode is suitable when transactions are limited and only a few capital gains entries need to be reported. 

Option 2: Offline Common Utility (JSON)

The Offline Common Utility is appropriate when:

1. There are a huge number of transactions.
2. The return needs extensive disclosures.

This allows taxpayers to prepare the return offline, validate the data, generate a JSON file and upload on the portal.

Log in to the Income Tax e-Filing portal, go to the e-File tab and select Assessment Year 2026-27 and your preferred mode of filing.

Step 5: Select the Right ITR Form for Capital Gains Reporting

Use ITR-2 if you have salary, house property, capital gains or other sources without business income. Use ITR-3 if you are a proprietary business owner, a partner in a firm or trade in intraday stocks/F&O.

There is a change that allows assessee to file ITR 1 or 4 even if they have LTCG 112A upto 1.25 lakhs effective from AY 2024-25. 

Summary:

Income	ITR Form No.
Salary, House Property, Other Sources & Capital Gains	ITR-2
Business or Professional Income & Capital Gains	ITR-3
LTCG u/s 112A up to ₹ 1.25 lakh(no other capital gain and loss)	ITR-1/ITR 4

Step 6: Start Your IT Return Filing

We have described the online e-filing approach further. After selecting the ITR form, you would need to activate schedules applicable for your income types. 

Activate the applicable schedules such as Schedule CG, Schedule 112A, Schedule SI, Schedule CYLA/BFLA, Schedule CFL, Schedule VDA reporting, Schedule AL and Schedule FA, depending on your income.

The portal will import available pre-filled information such as your PAN details, salary, TDS, bank accounts and certain financial transactions. 

Do not assume the pre-filled data is complete. You would need to verify each detail. The information should always be verified against your own computation as per step 2 & 3.

Step 7: Report Capital Gains (Schedule CG Explained)

Schedule CG is the principal schedule used for reporting capital gains in ITR-2 and ITR-3.

After filing and verifying general information, open the Schedule CG.

Capital gains must be reported separately based on the type of asset and period of holding. Always enter figures exactly as per your reconciled computation.

A. Short-Term Capital Gains (STCG)

1. Capital Gain Tax on Property: STCG arise when land or building is sold after being held for 24 months or less. Report purchase date, transfer date, sale consideration, cost, improvement cost and transfer expenses as per Section 48.

It also requires stamp duty value (SDV). If the SDV exceeds 110% of the actual sale consideration under Section 50C, SDV will be adopted for capital gain computation.

2. Short-Term Capital Gains under Section 111A: This applies to STCG on listed equity shares, equity-oriented mutual funds and business trusts units where STT is paid. 

You need to provide details such as sale consideration, cost of acquisition, cost of improvement (if applicable) and transfer-related expenses incurred exclusively for the transaction. 

3. Pass Through Income/Loss: Report pass-through income or loss received from specified investment funds, such as Category I and Category II Alternative Investment Funds (AIFs) covered under Section 115UB. While filing the ITR, enter the details based on the Form 64C/Form 64D issued by the fund.

4. Other Capital Assets: Report transfer of other capital assets in the relevant sections under Schedule CG, like:

1. Bonus Shares
2. Rights Shares
3. ESOPs
4. Buyback of Shares
5. REIT Units
6. InvIT Units
7. Sovereign Gold Bonds
8. Physical Gold
9. Urban Agricultural Land

B. Long-term capital gain (LTCG)

In a similar manner, complete the reporting of long-term capital gains. It includes separate reporting for land & building, Listed Securities/GDRs (Section 112(1) & Section 115ACA), pass through income & loss. 

Step 8: Complete Long-Term Equity Transactions (Schedule 112A Explained)

If you have LTCG from listed equity shares or equity-oriented mutual funds taxable under Section 112A, go to Schedule 112A. Enter each security transaction separately or import details using CSV template.

It needs scrip-wise reporting if the share is acquired on and before 31^st January 2018. Otherwise, it is permitted to simply enter consolidated figures.

Report eligible equity LTCG details including security details, acquisition information, ISIN code, sale consideration and FMV as on 31^st January 2018.

The system will automatically apply ₹ 1.25 lakh exemption.

Step 9: Claim Capital Gain Exemptions & Deductions

You can claim exemption if you have invested capital gains in eligible assets. Report relevant section, exemption amount, investment details and Capital Gains Account Scheme details.

Keep documentary proof of the investment.

Exemption	Applicable Section
Investment in residential house property	54
Sale of asset other than residential house and investment in house	54F
Government-specified long-term bonds	54EC

Step 10: Report Capital Losses and Set-Off

Capital losses reported in Schedule CG are automatically considered for set-off in Schedule CYLA (Current Year Loss Adjustment), which records the adjustment of current-year losses against eligible income. If any losses remain unadjusted, Schedule BFLA (Brought Forward Loss Adjustment) is used to set off eligible losses carried forward from earlier years.  

Set off Rules of capital gains head are:

1. Short-term capital loss can be adjusted against both STCG and LTCG.
2. Long-term capital loss can be adjusted only against LTCG.

As per Section 74, Unabsorbed capital loss can be set off against eligible future capital gains for up to 8 assessment years.

However, if you file a belated return, even if it is just a day late, on August 1^st, those losses will be completely forfeited. If you want to use your current losses to save on taxes down the road, you must meet the July deadline.

Step 11: Provide Information About Accrual/Receipt of Capital Gains (Table F of Schedule CG)

Table F is used to provide quarter-wise details of when capital gains actually arose during the financial year. 

1. Upto June 15
2. June 16 to September 15
3. September 16 to December 15
4. December 16 to March 15
5. March 16 to March 31

If you leave it blank, it may affect 234C interest calculation. This would appear as an error in the ITR.

The sum of quarterly break-up must match the capital gains calculated across the rest of the schedules. If there is even a ₹ 1 discrepancy due to rounding differences, the portal will display a validation error.

Step 12: Report Virtual Digital Asset (VDA) Income

If you transferred virtual digital assets such as cryptocurrency or NFTs during the year, you must report the details in Schedule VDA. 

Step 13: Complete Schedule AL and Schedule FA (If Applicable)

A. Schedule AL – Assets and Liabilities

Schedule AL is applicable for ITR-2/ITR-3 taxpayers whose total income exceeds ₹ 1 crore (AY 2026-27). Report details of assets and liabilities held as on 31 March, including:

1. Immovable assets: Land and buildings
2. Financial assets: Bank balances, shares, securities, loans and advances
3. Movable assets: Jewellery, bullion, vehicles, yachts and aircraft
4. Liabilities: Outstanding loans/borrowings

B. Schedule FA – Foreign Assets and Income

It is applicable to Resident and Ordinarily Resident (ROR) taxpayers having foreign assets, foreign financial interests, signing authority in foreign accounts or foreign income. 

It is based on the relevant calendar year (January-December) and is not applicable to NR/RNOR taxpayers.

Step 14: Verify Tax Computation, Validate and Submit Return

After completing all above steps diligently, proceed to the final tax computation and submission process.

If any tax is payable, pay the required self-assessment tax and enter the challan details in the tax payment section. Before submission, click Validate Return and resolve any errors shown by the utility.

Preview the complete ITR and verify the important details. Submit the return through the Income Tax e-Filing portal. Complete e-verification through Aadhaar OTP, net banking, bank EVC or DSC (select any option).

After successful verification, download and retain the ITR acknowledgement.

Troubleshooting AIS/TIS vs. Broker Statement Mismatches

Discrepancy between what your broker shows about you earning and what the Income Tax Department’s Annual Information Statement (AIS) reflects is a one of most common reason for tax notices in recent years.

The AIS compiles financial data from multiple reporting entities, including depository participants, registrars and banks. However, it is far from flawless. Duplicate entries and missing purchase details happen all the time.

If your broker statement and your AIS do not match, do not blindly file according to the incorrect AIS numbers. The department allows you to file your return based on your verified books of accounts and actual transactional records.

How to systematically handle an AIS mismatch before tax filing:

1. Verify the Source Data: Cross-reference your broker’s statement with your bank statements to confirm the exact cash inflows and outflows for the disputed transactions.

2. Identify the Error Type: Common issues are AIS treating a simple broker-to-broker portfolio migration as a taxable sale or showing incorrect the cost of acquisition.

3. Submit Online Feedback on the AIS Portal: Log into the e-filing portal, go to the AIS tab, select the incorrect transaction and click on Feedback. You can choose options like “Information is not fully correct” or “Duplicate information”.

Common Mistakes While Reporting Capital Gains

Some of the most common ITR mistake in capital gain reporting are:

1. Filing the Wrong ITR Form: Taxpayers continue using Sugam ITR-1 or 4 despite having reportable capital gains. Selecting the incorrect return form may require filing a revised return and can delay processing.

2. Treating All Gains the Same: Different assets are governed by different tax provisions. Using one tax rate or one holding period for every asset can result in incorrect reporting.

3. Ignoring Schedule 112A: Many taxpayers report long-term gains in Schedule CG but forget to add Schedule 112A and fail to provide required disclosures. Incomplete reporting results in processing delays and intimations.

4. Not Claiming Eligible Exemptions: Some taxpayers pay incorrect tax simply because they are unaware of exemptions available under Sections 54, 54B, 54F, 54EC etc. Conversely, claiming an exemption without satisfying the prescribed conditions can also create future complications.

5. Missing Supporting Documents: It is important to retain copies of documents that form the basis of the computation of income. These records can be helpful if the Income Tax Department seeks clarification later.

Know the 12 dangerous ITR filing mistakes.

Frequently Asked Questions (FAQs) related to ITR Filing

1. Which ITR form is required when I have capital gains – can I still file ITR-1?

For AY 2026-27, resident individuals can file ITR-1 if your only capital gain is Long-Term Capital Gain under Section 112A up to ₹ 1.25 lakh provided there is no other capital gains & losses. Otherwise, you would need to either go for ITR 2 or ITR 3. If you have taxable capital gains from shares, mutual funds, property or other capital assets (other than Section 112A LTCG upto  ₹ 1.25 lakh), you have to file ITR-2. If you also have business or professional income, ITR-3 is applicable.

2. How are STCG and LTCG on listed shares and equity mutual funds taxed for AY 2026-27?

For AY 2026-27, Short-Term Capital Gains (STCG) arising from the sale of listed equity shares, equity-oriented mutual funds and units of a business trust, where STT has been paid, are taxable at 20% under Section 111A. Long-Term Capital Gains (LTCG) on these assets are taxable under Section 112A at 12.5% on gains exceeding ₹ 1.25 lakh in a financial year. Capital gain tax on shares depends on the type of transaction and holding period. The above tax rates are base rates. Health and Education Cess (currently 4%) and any applicable surcharge are levied separately while calculating your final tax liability. 

3. How do I report the sale of property in the ITR and which exemptions (54/54F/54EC) can I claim?

The sale of property is reported in Schedule CG. You may be eligible to claim exemptions under Section 54, Section 54F or Section 54EC, provided all conditions are satisfied. Supporting documents should be retained for future reference.

4. What if my broker statement or AIS/TIS does not match my own computation?

If your broker statement or AIS/TIS does not match your own computation, you should first determine the correct figures using your transaction records. If the information is incorrect in AIS/TIS, you can put feedback on the insight portal.

5. Can capital losses be set off and carried forward if the ITR is filed after the due date?

Current year capital losses can be set off against eligible capital gains in the same year. However, to carry forward unabsorbed capital losses to future years, the ITR must be filed on or before the due date under Section 139(1) of the Income-tax Act.

6. Does Master Brains review capital gains computations before the return is filed?

As part of our Income Tax Consultancy Services, Master Brains reviews capital gains computations for shares, mutual funds, property and other capital assets. Our tax professionals help reconcile supporting documents, review exemption claims, verify reporting details and identify reporting issues before the return is submitted.

Income Tax Return Filing by Income Tax Consultants in India

Capital gains reporting is not just about filing the schedules; it begins with fine income and tax computation, reconciliation and compliance review. Since capital gains remain one of the hottest areas of income tax litigation, 100% accurate reporting and proper documentation are imperative.

At Master Brains, our Chartered Accountants & Income Tax Return Filing Consultants provide comprehensive income tax consultancy services including:

• Correct ITR form selection (ITR-1 to ITR-7)
• AIS, TIS and Form 26AS reconciliation
• Capital gains computation for shares, mutual funds, property & virtual digital assets
• Schedule CG, Schedule VDA & 112A reporting
• ITR-2 and ITR-3 filing support
• Review of exemption claims under Sections 54, 54F and 54EC, etc.
• Capital loss set-off and carry-forward review
• Income Tax Return filing services
• Revised, belated and updated return filing
• Pre-submission tax review and compliance checks
• Assistance with capital gains-related income tax notices and compliance queries

Would you like Master Brains to manage your capital gains reconciliation and handle the portal filing for you?

Get in touch with Master Brains today for an expert review of your capital gains computation and file your Income Tax Return with greater confidence.

Call: +91 8595867402

Email: masterbrains.office@gmail.com