ITR Filing for Capital Gains – Shares, MF, Property & Crypto FY 2025-26
Report LTCG and STCG from shares, mutual funds, property, and crypto accurately in ITR-2 for AY 2026-27. Understand new tax rates after Budget 2024, exemptions under Sec 54, 54F, 54EC, and avoid costly notice-triggering mistakes.
In This Guide – Capital Gains ITR Filing FY 2025-26
- What is Capital Gains? – Types & Holding Periods
- Capital Gains Tax Rates for FY 2025-26 – All Assets
- Equity Shares & Mutual Funds – LTCG & STCG
- Property Capital Gains – Sec 54, 54F & 54EC Exemptions
- Crypto & Virtual Digital Assets (VDA) Taxation
- Which ITR Form – ITR-2 vs ITR-3?
- Documents Required for Capital Gains ITR
- Step-by-Step Filing Process
- Common Mistakes to Avoid
- Frequently Asked Questions
What is Capital Gains & How is it Classified?
Capital gain is the profit earned on sale of a capital asset. The tax rate depends entirely on the type of asset and how long you held it before selling.
Long Term Capital Gains (LTCG)
Profit on sale of assets held for longer than the prescribed holding period. Generally taxed at lower, flat rates.
Short Term Capital Gains (STCG)
Profit on sale of assets held for shorter than the prescribed holding period. Generally taxed at higher rates or slab rates.
Crypto, NFTs, and other Virtual Digital Assets are NOT classified as capital gains. They are a separate category under Section 115BBH, taxed at a flat 30% regardless of holding period. No set-off against other losses is permitted. See Section 5 of this guide for full details.
Capital Gains Tax Rates for FY 2025-26 – All Assets
Budget 2024 significantly revised capital gains tax rates effective 23 July 2024. These revised rates apply for the full FY 2025-26.
| Asset Type | Holding Period | STCG Rate | LTCG Rate | Indexation |
|---|---|---|---|---|
| Listed Equity Shares | ≤1 yr = STCG | >1 yr = LTCG | 20% (was 15%) | 12.5% above ₹1.25L (was 10%) | No |
| Equity Mutual Funds | ≤1 yr = STCG | >1 yr = LTCG | 20% | 12.5% above ₹1.25L | No |
| Debt Mutual Funds | Deemed to be STCG irrespective of holding period | Slab Rates | Slab rate (no indexation) | No |
| Immovable Property | ≤2 yr = STCG | >2 yr = LTCG | Slab Rates | 12.5% without idx OR 20% with idx (taxpayer’s choice) | Optional |
| Gold / Jewellery | ≤2 yr = STCG | >2 yr = LTCG | Slab Rates | 12.5% without idx OR 20% with idx | Optional |
| Unlisted Shares | ≤2 yr = STCG | >2 yr = LTCG | Slab Rates | 12.5% without indexation | No |
| Crypto / VDA | No distinction | Flat 30% | Flat 30% | No |
STCG on equity raised from 15% to 20%. LTCG on equity raised from 10% to 12.5%. LTCG exemption on equity raised from ₹1 lakh to ₹1.25 lakh. Property LTCG now 12.5% without indexation OR 20% with indexation – taxpayer’s choice. Holding period for property to qualify as LTCG remains 2 years.
Equity Shares & Mutual Funds – LTCG & STCG for FY 2025-26
Most investors deal with equity capital gains. Here is exactly how it is computed, reported, and taxed.
LTCG & STCG Calculation Example – FY 2025-26
Example – Equity Shares Sold
Grandfathering – Pre-2018 Gains
For equity shares purchased before 31 January 2018, the cost of acquisition is the higher of:
- Actual purchase price
- Fair Market Value (FMV) as on 31 Jan 2018
This “grandfathering” prevents taxation of gains that accrued before LTCG was reintroduced in 2018. Your broker’s capital gains statement should already compute this correctly.
Set-Off & Carry Forward Rules for Capital Losses
STCG Loss
- Can be set off against STCG or LTCG in same year
- Balance loss can be carried forward for 8 years
- Cannot set off against salary or other income
LTCG Loss
- Can only be set off against LTCG in same year
- Balance loss can be carried forward for 8 years
- Cannot set off against STCG or salary
Crypto / VDA Loss
- Loss from one VDA cannot set off against gain from another VDA
- Cannot set off against any other income
- Cannot be carried forward either
Capital losses can only be carried forward to future years if you file your ITR on or before the due date (31 July 2026 for AY 2026-27). If you file a belated return, capital losses for that year are permanently lost and cannot be carried forward.
Property Capital Gains – Exemptions Under Sec 54, 54F & 54EC
Sold a house, plot, or commercial property? You can significantly reduce your LTCG tax liability by reinvesting proceeds under these three key exemption sections.
Residential House to Residential House
- Sell a residential house (held >2 years)
- Reinvest in 1 new residential house in India
- Purchase: 1 year before or 2 years after sale
- Construction: within 3 years of sale
- Max exemption: ₹10 crore (Budget 2023 cap)
Any Long-Term Asset to Residential House
- Sell any long-term asset (plot, commercial, gold, shares)
- Invest entire net sale consideration in new residential house
- Purchase: 1 year before or 2 years after sale
- Must NOT own more than 1 residential house (other than the new one) on sale date
- Proportionate exemption if partial reinvestment
Reinvest in NHAI / REC Bonds
- Sell any land or building (LTCG)
- Invest in NHAI or REC specified bonds
- Must invest within 6 months of sale
- Max investment and exemption: ₹50 lakh
- Lock-in period: 5 years (cannot sell before)
If the LTCG from property sale has not been reinvested by the ITR due date (31 July 2026), deposit the unutilised amount in a Capital Gains Account Scheme in any nationalised bank before filing the return. This protects your exemption claim while you complete the purchase/construction. The amount must be utilised within the specified period (2-3 years) or it becomes taxable.
Crypto & Virtual Digital Assets (VDA) – Tax Rules FY 2025-26
Crypto is the most misunderstood and mis-reported income type in India. Here is exactly what the law says for FY 2025-26.
Tax Rate – Flat 30%
All income from VDAs (Bitcoin, Ethereum, NFTs, tokens, etc.) is taxed at a flat 30% under Section 115BBH – regardless of holding period, profit size, or whether you are a trader or investor. Even ₹100 gain is taxed at 30%.
No Deductions Allowed
No deductions are allowed from VDA income – not even cost of acquisition (only purchase cost is deductible). No mining expenses, electricity bills, transaction fees, or any other expenses can be claimed. No 80C / 80D benefit against VDA income.
TDS at 1% – Section 194S
Exchanges deduct TDS at 1% on crypto transactions exceeding ₹10,000 per year (₹50,000 for specified persons). This TDS appears in Form 26AS and AIS. Claim this TDS credit in your ITR to reduce tax liability or get a refund.
Schedule VDA in ITR
Report all crypto transactions in Schedule VDA in ITR-2 or ITR-3. Each transaction (buy and sell) must be reported separately with date, purchase cost, and sale proceeds. Cannot file ITR-1 or ITR-4 if you have any VDA transactions.
Crypto-to-Crypto Trades Taxable
Exchanging Bitcoin for Ethereum, or any crypto-to-crypto swap, is a taxable event in India. The profit on the swap is computed as the fair market value of the received crypto minus the cost of the crypto given. Each swap must be reported.
Gifted or Airdropped Crypto
Crypto received as gift is taxable at the hands of the recipient if value exceeds ₹50,000 (taxed as “Income from Other Sources”). Airdrops and staking rewards are also taxable as income at the time of receipt based on fair market value on that date.
Which ITR Form to Use for Capital Gains?
Capital gains cannot be reported in ITR-1 or ITR-4. You must use ITR-2 or ITR-3 depending on your other income.
Use ITR-2 if you have:
- Salary + capital gains (shares, MF, property)
- Capital gains only (no salary, no business income)
- Foreign income or foreign assets
- More than one house property income
- Crypto / VDA income
- Resident Indian or NRI
Use ITR-3 if you additionally have:
- Business income or professional income (ITR-4 filers who also have capital gains)
- F&O trading income (always ITR-3, treated as business)
- Partner in a firm with capital gains
- Intraday trading (speculative business income)
Documents Required for Capital Gains ITR Filing
Collect all these documents before you start. Incomplete capital gains data is the single biggest cause of income tax notices for investors.
Equity & Mutual Funds
- Capital Gains Statement from broker (Zerodha, Groww, HDFC Sec etc.)
- Capital Gains Statement from CAMS / KFintech (for mutual funds)
- Demat account statement (full year Apr 2025 – Mar 2026)
- Contract notes for all buy and sell transactions
- Form 16A / TDS certificates from broker
Property Sale
- Original purchase deed with date and purchase cost
- Sale deed with date and sale consideration
- Stamp duty valuation / circle rate (Section 50C)
- Improvement / renovation cost receipts (if any)
- New property purchase deed (for Sec 54 exemption)
- 54EC bond certificate (NHAI/REC) if invested
- CGAS passbook (if deposited in Capital Gains Account)
Crypto / VDA
- Full transaction history from each exchange (WazirX, CoinDCX, Binance etc.)
- Buy and sell dates with INR value for each transaction
- TDS certificates (Form 16A) from exchanges
- Wallet-to-wallet transfer records if any
- Airdrop and staking reward records with date and INR value
From IT Portal
- Form 26AS – verify all TDS on capital gains
- Annual Information Statement (AIS) – check securities transactions
- Previous year ITR (for carried forward loss details)
- Pre-validated bank account (for refund)
Step-by-Step – How to Report Capital Gains in ITR-2
Follow these steps on the official incometax.gov.in portal. Due date is 31 July 2026 for salaried investors.
Download CG Statement
Get capital gains statement from broker (Zerodha, Groww) and CAMS for MF. Cross-check with AIS on IT portal.
Login & Select ITR-2
Login at incometax.gov.in. Go to e-File > ITR > File ITR. Select ITR-2. Most fields will be pre-filled.
Fill Schedule CG
Enter LTCG and STCG details in Schedule CG. Add LTCG equity, STCG equity, property gains, debt fund gains separately.
Fill Schedule VDA (Crypto)
If you have crypto, fill Schedule VDA with each transaction. Enter purchase cost and sale price for each token sold.
Claim Exemptions
Fill Schedule 54/54F/54EC if property was sold. Enter reinvestment details and claim exemption to reduce taxable LTCG.
Pay Tax & e-Verify
Pay capital gains tax via Challan 280. Submit ITR and e-verify within 30 days. Unverified ITR is invalid.
Sec 50C – Stamp Duty Value: For property sales, if the sale consideration is less than the stamp duty valuation (circle rate), the stamp duty value is treated as the deemed sale consideration for capital gains computation. This means you may be taxed on a higher gain than you actually received. This is a very common trap for property sellers.
Common Mistakes Investors Make While Reporting Capital Gains
These errors are the most frequent triggers for income tax notices, demand notices, and interest liability for investors.
Filing ITR-1 With Capital Gains
This is the most common mistake. If you redeemed even ₹1 of mutual funds or sold any shares during FY 2025-26, you CANNOT file ITR-1. The IT portal may accept it but it constitutes a defective return and you will receive a 139(9) notice asking you to refile with ITR-2.
Not Reporting Small Capital Gains
Many investors believe LTCG below ₹1.25 lakh is not taxable and therefore do not report it. Wrong – you must still report it in Schedule CG. Only the TAX is zero, not the reporting. All securities transactions appear in AIS and unreported gains trigger automated notices.
Missing Dividend Income
Since FY 2020-21, dividends are fully taxable in the hands of investors. TDS at 10% is deducted by companies on dividends above ₹5,000. All dividends appear in AIS. Not reporting them causes a mismatch notice under 143(1)(a). Report under “Income from Other Sources”.
Not Reporting Crypto in Schedule VDA
Crypto transactions appear in AIS via exchange reporting and TDS deductions. Not reporting them or reporting incorrectly is a major compliance risk. Crypto income reported under “Capital Gains” instead of Schedule VDA is also an error. Each exchange transaction must be individually reported.
Missing the 54EC Bond Investment Deadline
To claim Sec 54EC exemption on property LTCG, you must invest in NHAI/REC bonds within 6 months of the property sale date – not 6 months from the ITR due date. Missing this deadline permanently forfeits the exemption and you become liable for full LTCG tax plus interest.
Using Wrong Cost for Old Investments
For shares and MF units bought before 31 January 2018, the cost for LTCG computation must use the grandfathering FMV as on 31 Jan 2018, not the original purchase price. Ignoring this leads to higher taxable gains. Download your broker’s capital gains statement which automatically applies grandfathering.
FAQs – Capital Gains ITR Filing FY 2025-26
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