New ITR-2 form FY 2025-26 — revised capital gains schedule explained
The Income Tax Return filing process for FY 2025-26 (AY 2026-27) brings an important change for taxpayers reporting capital gains.
The revised ITR-2 has streamlined the Capital Gains reporting requirements, particularly by removing the earlier bifurcation of capital gains based on whether the asset was transferred before or after 23 July 2024.
This is relevant for individuals and HUFs having capital gains from shares, mutual funds, securities, property and other capital assets.
The Income Tax Department has specifically confirmed that the requirement to report capital gains separately based on the 23 July 2024 cut-off date has been removed from AY 2026-27. The applicable short-term and long-term capital-gains rates are also reflected according to the rates applicable for AY 2026-27.
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🧾 What Is ITR-2?
ITR-2 is applicable to Individuals and HUFs who do not have income from Profits and Gains of Business or Profession.
It can be used where the taxpayer has income from:
• Salary or pension
• House property
• Capital gains
• Other sources
• Agricultural income exceeding ₹5,000
• Foreign assets/income, where applicable
It can also be used by individuals who are directors in companies or have held unlisted equity shares, subject to the applicable conditions.
Therefore, if an individual has salary income + share-market capital gains, but no business/professional income, ITR-2 may be the appropriate return.
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🔄 What Has Changed in ITR-2 for FY 2025-26?
One of the key changes is in Schedule CG — Capital Gains.
Earlier, taxpayers had to deal with a significant reporting distinction based on the date of transfer:
Before 23 July 2024
and
On or after 23 July 2024
This was introduced because the Finance (No. 2) Act, 2024 changed several capital-gains provisions effective from 23 July 2024.
For AY 2026-27, the Income Tax Department has removed this date-based bifurcation from Schedule CG.
This makes the return reporting process considerably cleaner.
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📅 Why Was 23 July 2024 Important?
The date 23 July 2024 became important because several capital-gains provisions were changed from that date.
The changes included:
• Revision in long-term capital-gains tax rate
• Changes in short-term capital-gains taxation for specified securities
• Changes in holding-period rules
• Removal of indexation benefit in many cases
• Changes concerning immovable property
• Changes in the Section 112A exemption threshold
As a result, earlier ITR forms required taxpayers to report transactions separately based on the date of transfer.
For AY 2025-26, this created additional complexity when preparing Schedule CG.
For AY 2026-27, the ITR has been redesigned to remove that particular date-based reporting split.
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📊 How Was Capital Gains Reporting Earlier?
Under the earlier ITR structure, capital-gains reporting could require separate details depending on whether the transfer took place:
Before 23 July 2024
or
On/after 23 July 2024
This was particularly relevant for taxpayers with transactions spanning both periods.
For example, an investor who sold:
• Shares in June 2024
• Mutual funds in September 2024
• Property in December 2024
could encounter separate reporting requirements because the applicable capital-gains provisions differed across the cut-off date.
The revised ITR-2 removes this particular date-based bifurcation.
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🆕 What Does the Revised Schedule CG Do?
The new Schedule CG focuses more directly on the type of capital asset and nature of gain.
The ITR-2 user manual states that capital gains from different types of capital assets are segregated within Schedule CG. Where more than one asset of the same type is transferred, a consolidated computation can generally be entered for assets of the same type.
However, for land/building, the computation must be entered separately for each property.
This is an important practical change to keep in mind while preparing the return.
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🏠 Special Reporting for Sale of Land or Building
Taxpayers selling immovable property need to be particularly careful.
For other assets of the same category, the ITR allows consolidation in the manner prescribed.
But for land or building, the ITR-2 instructions specifically state that computation must be entered separately for each land/building.
So if a taxpayer sold:
Property 1 — Delhi
Property 2 — Noida
Property 3 — Gurgaon
the capital-gains computation should not simply be clubbed into one generic property entry.
Each property needs to be appropriately reported.
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📈 Short-Term vs Long-Term Capital Gains
The revised Schedule CG continues to distinguish between:
Short-Term Capital Gain (STCG)
and
Long-Term Capital Gain (LTCG)
The correct classification depends on the nature of the asset and the applicable holding-period rules.
The ITR-2 manual specifically provides for reporting both short-term and long-term capital gains/losses for the different categories of capital assets.
Therefore, removing the 23 July 2024 bifurcation does not mean that STCG and LTCG are combined.
The taxpayer still needs to correctly determine:
Nature of asset → Holding period → STCG/LTCG → Applicable tax rate
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📊 What Are the Major Capital Gains Categories?
While completing Schedule CG, taxpayers may encounter different categories for assets such as:
🏠 Land & Building
Capital gains from sale of:
• Residential property
• Commercial property
• Land
• Other immovable property
📈 Equity Shares
Sale of listed/unlisted equity shares may have different tax treatment depending on the circumstances.
📊 Equity-Oriented Mutual Funds
Units of equity-oriented mutual funds may be subject to the special capital-gains provisions.
💰 Other Securities
This can include various securities and investment instruments depending on their classification.
🪙 Other Capital Assets
Other assets may include:
• Gold
• Jewellery
• Bonds
• Debt-oriented investments
• Other investments
• Personal capital assets that qualify under the Act
The appropriate Schedule CG section should be selected based on the asset and transaction.
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📑 Schedule 112A Still Matters
The revised ITR-2 continues to have Schedule 112A.
Schedule 112A is relevant for specified long-term capital gains from:
• Equity shares of a company
• Units of equity-oriented mutual funds
• Units of business trusts
where the relevant STT conditions are satisfied.
The ITR-2 user manual specifically lists Schedule 112A separately from Schedule CG.
Therefore, taxpayers should not assume that all equity-related capital gains can simply be entered in one place.
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🧮 Example — Equity Shares Sold During FY 2025-26
Suppose an individual has:
Purchase value of listed shares: ₹4,00,000
Sale value: ₹6,50,000
Capital gain: ₹2,50,000
The taxpayer needs to determine:
• Whether the gain is STCG or LTCG
• Whether the shares fall under the relevant special provisions
• Whether STT conditions are satisfied
• Whether Schedule 112A is applicable
• The applicable tax rate
• The relevant exemption threshold, where applicable
The transaction is then reported in the appropriate capital-gains schedule.
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🏠 Example — Sale of Property
Suppose a taxpayer sells a residential property during FY 2025-26.
The taxpayer should calculate:
Full value of consideration
Less:
Transfer expenses
Less:
Cost of acquisition
Less:
Eligible improvement cost
= Capital Gain
The taxpayer must then determine whether the gain is short-term or long-term under the applicable rules and report the property separately in Schedule CG.
The ITR-2 instructions specifically require separate computation for each transfer of land/building.
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⚠️ Do Not Use the Old 23 July 2024 Split
This is one of the most important points for AY 2026-27.
If you are preparing ITR-2 for FY 2025-26, do not blindly use the old format that asks you to divide transactions into:
Before 23 July 2024
and
After 23 July 2024
The Income Tax Department has expressly stated that this bifurcation has been removed for AY 2026-27.
The taxpayer should instead use the revised Schedule CG applicable for AY 2026-27.
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📉 What About Capital Losses?
The revised ITR-2 also requires proper reporting of capital losses.
This includes:
• Short-term capital loss
• Long-term capital loss
• Current-year loss
• Brought-forward capital loss
• Loss adjustment, where permitted
• Loss to be carried forward
The taxpayer should not simply enter the net figure without maintaining the underlying transaction-wise working.
This is particularly important where there are multiple purchases and sales during the year.
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🔄 Capital Loss Set-Off
Capital losses are subject to specific set-off rules.
Generally:
Short-Term Capital Loss
Can be adjusted against eligible short-term as well as long-term capital gains, subject to the applicable provisions.
Long-Term Capital Loss
Can generally be adjusted only against long-term capital gains.
Any eligible unabsorbed capital loss may be carried forward subject to the prescribed conditions and filing requirements.
Therefore, if a taxpayer has both gains and losses during FY 2025-26, the Schedule CG computation should be prepared carefully before entering the final figures into ITR-2.
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🧾 Don’t Rely Only on AIS for Capital Gains
Another important practical point is reconciliation.
Before filing ITR-2, taxpayers should reconcile capital-gains information using available records such as:
Broker statement
Contract notes
Capital-gains statement
Mutual fund statement
Demat statement
AIS
TIS
Bank statement
The figures reported in AIS may not always be sufficient to determine the actual taxable capital gain.
For example, AIS may show transaction information, but calculating capital gain may require:
Sale consideration + purchase cost + transfer expenses + acquisition date + applicable tax rules
Therefore, the broker’s capital-gains statement should be used along with the taxpayer’s own records.
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🏦 What About Shares Purchased Through Multiple Transactions?
Suppose you purchased the same stock several times:
100 shares in April
150 shares in July
200 shares in November
and subsequently sold:
250 shares
The taxpayer should determine the correct acquisition cost and applicable matching methodology based on the nature of the securities and applicable tax rules.
Simply taking the average purchase price without checking the applicable rules can result in an incorrect capital-gains calculation.
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💻 ITR-2 Online Filing — Capital Gains Section
The Income Tax Department’s ITR-2 online service includes a dedicated:
Schedule Capital Gains
section.
The current ITR-2 structure also contains:
• Schedule CG
• Schedule 112A
• Schedule 115AD(1)(iii) proviso
• Schedule VDA
• Schedule Other Sources
• Schedule CYLA
• Schedule BFLA
• Schedule CFL
• Schedule FSI
• Schedule TR
• Schedule FA
• Schedule AL
among others.
This means capital gains should be considered alongside the taxpayer’s other schedules rather than as an isolated calculation.
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🌍 Capital Gains for NRIs
Non-resident taxpayers may also use ITR-2 where eligible.
However, additional considerations can arise for:
• Sale of Indian shares
• Sale of Indian property
• Securities
• DTAA
• Special tax rates
• TDS
• Repatriation
• Foreign assets
• Foreign income
ITR-2 contains Schedule 115AD for specified non-resident/FII/FPI cases, and the user manual specifically explains that Schedule 115AD becomes relevant based on the taxpayer’s status and applicable conditions.
Therefore, NRIs should not simply copy the capital-gains calculation of a resident taxpayer.
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🪙 What About Virtual Digital Assets?
ITR-2 also contains a separate Schedule VDA.
This is important for taxpayers reporting income from virtual digital assets.
The ITR-2 user manual lists Schedule VDA separately from Schedule CG.
Therefore, crypto/VDA-related income should be reported in the designated schedule rather than being casually included with ordinary capital gains.
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📌 Why the Revised Schedule Is Important
The revised structure is useful because it reduces one major source of complexity.
Previously, taxpayers and professionals had to carefully track the 23 July 2024 date while entering capital-gains details.
For FY 2025-26, transactions fall entirely within the post-23 July 2024 tax framework.
Therefore, the revised ITR-2 does not need the earlier date-based split.
This makes the return:
Simpler to prepare
Easier to reconcile
Less prone to date-based reporting errors
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⚠️ Common Mistakes While Filing ITR-2 for Capital Gains
❌ Mistake 1 — Using Last Year’s ITR Format
Do not copy the capital-gains schedule from AY 2025-26 and assume the structure is identical.
The Income Tax Department has revised Schedule CG for AY 2026-27.
❌ Mistake 2 — Applying the 23 July 2024 Split
This bifurcation has been removed for AY 2026-27.
❌ Mistake 3 — Combining All Capital Gains
STCG and LTCG need to be appropriately classified.
❌ Mistake 4 — Combining Multiple Properties
Land/building transactions need separate computation for each property.
❌ Mistake 5 — Ignoring Schedule 112A
Specified equity and equity-oriented mutual-fund LTCG may require Schedule 112A.
❌ Mistake 6 — Using Sale Value as Capital Gain
Capital gain is not simply the sale consideration.
The acquisition cost and other applicable adjustments need to be considered.
❌ Mistake 7 — Ignoring Capital Losses
Current-year and brought-forward losses need to be properly considered for set-off and carry-forward.
❌ Mistake 8 — Filing ITR-2 When Business Income Exists
ITR-2 is not meant for individuals/HUFs having income chargeable under Profits and Gains of Business or Profession.
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📝 Step-by-Step Process to Prepare Schedule CG
Step 1 — Collect All Investment Statements
Download:
• Broker capital-gains statement
• Mutual-fund capital-gains statement
• Demat statement
• Contract notes
• Property purchase/sale documents
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Step 2 — Reconcile Transactions
Compare the investment records with:
• AIS
• TIS
• Bank statements
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Step 3 — Classify Assets
Separate:
• Equity shares
• Mutual funds
• Securities
• Property
• Gold/jewellery
• Other capital assets
• VDA, where applicable
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Step 4 — Determine STCG/LTCG
Apply the relevant holding-period and asset-specific rules.
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Step 5 — Calculate Gains/Losses
Determine the correct:
Sale consideration
Cost
Transfer expenses
Applicable adjustments
Capital gain/loss
________________________________________
Step 6 — Report in Schedule CG
Use the revised AY 2026-27 structure.
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Step 7 — Complete Schedule 112A Where Applicable
Specified equity/equity-oriented fund transactions should be reported appropriately.
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Step 8 — Check Set-Off
Adjust eligible capital losses against eligible gains.
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Step 9 — Check Carry-Forward Loss
Determine whether any remaining eligible loss needs to be carried forward.
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Step 10 — Cross-Check Final Tax
Verify that the capital-gains tax calculated in the return agrees with the working papers.
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📌 Important: FY 2025-26 vs AY 2026-27
There is sometimes confusion because FY 2025-26 and AY 2026-27 are used together.
For income earned from:
1 April 2025 to 31 March 2026
the corresponding return is:
AY 2026-27
The Income Tax Department confirms that income earned during FY 2025-26 is filed under AY 2026-27 using the Income Tax Act, 1961 framework.
The new “Tax Year” terminology under the Income Tax Act, 2025 applies to income from FY 2026-27 onward; it does not change the treatment of the FY 2025-26 return.
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🔍 Current ITR-2 Availability
The Income Tax Department has made the AY 2026-27 ITR-2 utility available.
The downloads page currently shows an Excel-based ITR-2 utility, with the latest listed version released on 31 July 2026.
The online ITR-2 service is also available through the e-Filing portal.
This is important because taxpayers should use the latest available utility/schema rather than relying on an older downloaded version.
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🎯 Key Takeaways
The most important points for ITR-2 AY 2026-27 are:
✅ ITR-2 applies to eligible Individuals and HUFs who do not have business/professional income.
✅ Schedule CG has been revised.
✅ The earlier before/after 23 July 2024 capital-gains bifurcation has been removed for AY 2026-27.
✅ STCG and LTCG still need to be correctly classified.
✅ Capital gains from different asset categories are separately identified within Schedule CG.
✅ For land/building, separate computation is required for each property.
✅ Schedule 112A continues to be relevant for specified equity/equity-oriented fund transactions.
✅ VDA transactions have a separate Schedule VDA.
✅ Capital-gains figures should be reconciled with broker statements, AIS/TIS and supporting documents.
✅ Always use the latest ITR utility/schema available on the Income Tax Department portal.
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🏁 Final Thoughts
The revised ITR-2 for FY 2025-26 / AY 2026-27 makes capital-gains reporting more streamlined by removing the earlier 23 July 2024 date-based bifurcation.
However, the simplification in the form does not eliminate the need for a detailed capital-gains working.
Taxpayers should still correctly determine:
Type of asset → Date of acquisition → Date of transfer → Holding period → STCG/LTCG → Cost → Transfer expenses → Applicable tax rate → Set-off/carry-forward of losses → Correct ITR schedule
For taxpayers with multiple share transactions, mutual funds, property sales or carried-forward capital losses, preparing the capital-gains computation before starting ITR-2 can significantly reduce errors.
And most importantly, don’t simply copy last year’s Schedule CG into this year’s return—the AY 2026-27 form has specifically changed the reporting structure.
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Sony Garg is a Senior Taxation professional in TAXAJ's Accounts & Taxation team. With over six years of industry experience, Sony supports clients on direct and indirect tax compliance, filings and advisory. TAXAJ is a multi-disciplinary consulting firm spanning finance, taxation, legal, secretarial, FEMA and IPR, with offices in Delhi, Bihar, Bangalore and Goa.
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