ITR-2 for Capital Gains AY 2026-27 – Reporting Shares, Mutual Funds and Property

Introduction

For individuals and Hindu Undivided Families (HUFs) having income from capital gains, correct reporting of the sale of shares, mutual funds, land, buildings, and other capital assets is an important part of income tax return filing.

For AY 2026-27, eligible taxpayers can use ITR-2 where they do not have income chargeable under the head “Profits and Gains of Business or Profession.” ITR-2 specifically contains Schedule CG – Capital Gains, along with Schedule 112A for specified transactions involving equity shares, equity-oriented mutual funds, and units of business trusts on which STT is paid.

This article explains how capital gains from shares, mutual funds, and property should generally be reported in ITR-2 for AY 2026-27.

Who Can File ITR-2 for AY 2026-27?

ITR-2 is applicable to individuals and HUFs who do not have income from business or profession and have income from sources such as:

Salary or pension

House property

Capital gains

Income from other sources

Agricultural income exceeding the applicable threshold

Certain other specified sources

ITR-2 can also be applicable where an individual is a director in a company or has held unlisted equity shares during the relevant previous year.

If the taxpayer has income taxable under Profits and Gains of Business or Profession, ITR-2 is generally not the appropriate return form.

What is Schedule CG in ITR-2?

Schedule CG is the section of ITR-2 used to report capital gains or capital losses arising from the transfer of capital assets.

The Income Tax Department’s current ITR-2 guidance provides separate reporting for different categories of capital assets and requires taxpayers to report their short-term and long-term capital gains/losses.

The broad categories include:

Sale of land or building

Sale of equity shares

Sale of equity-oriented mutual fund units

Sale of other securities

Other capital assets

Specified transactions taxable at special rates

Capital Gains on Shares

Shares may generate either Short-Term Capital Gains (STCG) or Long-Term Capital Gains (LTCG) depending on the nature of the shares and the applicable holding period.

For example, listed equity shares generally have a shorter holding-period requirement for determining whether the asset is long-term compared with many other capital assets.

The ITR-2 Schedule CG captures the relevant sale consideration, cost and other applicable details.

Information You Should Keep Ready

For share transactions, taxpayers should maintain:

Name of the company

ISIN, where applicable

Date of purchase

Date of sale

Number of shares

Purchase cost

Sale consideration

Brokerage and eligible transfer expenses

STT details

Demat statement

Broker’s capital gains statement

Schedule 112A – Important for Equity Shares and Equity-Oriented Mutual Funds

Schedule 112A is particularly important where the taxpayer has transferred:

Equity shares of a company,

Units of an equity-oriented mutual fund, or

Units of a business trust,

and the transaction falls within the specified provisions relating to STT.

The Income Tax Department specifically states that Schedule 112A is used for reporting such transactions.

Taxpayers should carefully reconcile Schedule 112A with their broker or mutual fund capital gains statement.

Important Point for Older Investments

Where specified shares were acquired on or before 31 January 2018, the ITR-2 instructions require scrip-wise reporting in Schedule 112A in the applicable cases.

Therefore, taxpayers with older investments should maintain historical purchase information and not rely solely on the current market value shown in their demat statement.

Capital Gains on Mutual Funds

Mutual fund transactions should also be classified correctly based on the nature of the fund and the applicable tax provisions.

Common transactions include:

Equity mutual funds

Debt mutual funds

Hybrid funds

International funds

Other specified mutual fund units

The taxation of mutual fund units can differ depending on the nature of the investment and the applicable law.

Therefore, taxpayers should not simply calculate:

Sale Value – Purchase Value = Taxable Capital Gain

without first determining the applicable tax treatment.

Documents Required for Mutual Fund Capital Gains

It is advisable to obtain:

Consolidated Account Statement (CAS)

Mutual fund capital gains statement

Transaction statement

Purchase and redemption details

Dividend/distribution information, where relevant

Applicable tax statements

The capital gains statement should ideally be reconciled with the taxpayer’s bank account and investment records.

Capital Gains on Sale of Property

The sale of land, building, or both requires particular attention while filing ITR-2.

The current ITR-2 instructions require capital gains from transfer of land/building to be reported separately for each property.

The taxpayer should therefore maintain complete documentation relating to the property transaction.

Information Generally Required

Date of purchase

Date of sale

Purchase consideration

Sale consideration

Stamp duty value

Cost of improvement

Transfer expenses

Details of buyer

Ownership percentage

Applicable exemption claimed, if any

Stamp Duty Value and Section 50C

For transfer of land or building, the stamp valuation provisions under Section 50C can become relevant.

The ITR form contains fields for:

Full value of consideration received/receivable

Value adopted by the stamp valuation authority

Full value of consideration adopted under Section 50C, where applicable

The notified ITR form specifically provides for these details in the capital gains schedule.

Accordingly, taxpayers should retain the registered sale deed and relevant valuation/stamp duty documentation.

Long-Term vs Short-Term Capital Gains

Correctly determining whether a gain is short-term or long-term is essential because the applicable tax treatment can differ.

The holding period depends on the type of capital asset.

For example, the Income Tax Department’s guidance notes different holding-period rules for listed shares, equity-oriented mutual fund units, unlisted shares, and immovable property.

Taxpayers should therefore determine the holding period asset-wise rather than applying one common rule to all investments.

Capital Losses in ITR-2

A taxpayer may also have:

Short-term capital loss (STCL)

Long-term capital loss (LTCL)

These losses should be reported correctly in Schedule CG.

Depending on the applicable provisions, eligible capital losses may be carried forward and set off against capital gains in subsequent years, subject to the prescribed conditions and filing requirements.

Therefore, taxpayers should not ignore capital losses simply because there is no immediate tax liability.

Capital Gains Tax Rates for AY 2026-27

The tax rates applicable to capital gains depend on the type of asset, date of transfer, and relevant provisions of the Income-tax Act.

For AY 2026-27, the ITR-2 form reflects the applicable capital gains rate structure, including separate reporting for short-term gains taxable at specified rates.

It is therefore important to calculate the capital gain using the rules applicable to the particular asset instead of applying a uniform capital gains rate.

Important Change in ITR-2 for AY 2026-27

One important point for AY 2026-27 is that the requirement to bifurcate capital gains based on whether the transfer took place before or after 23 July 2024 has been removed from the ITR-2 reporting structure.

The Income Tax Department has specifically clarified this change in its AY 2026-27 ITR-2 FAQs.

This simplifies the reporting process compared with earlier return forms.

How to Report Capital Gains in ITR-2

A practical approach is as follows:

Step 1 – Collect Investment Statements

Collect:

Demat statement

Broker statement

Mutual fund capital gains statement

Property sale documents

Purchase documents

Step 2 – Prepare Capital Gains Working

Calculate the capital gain/loss separately for:

Shares

Mutual funds

Property

Other capital assets

Step 3 – Classify the Assets

Determine whether each transaction results in:

STCG

LTCG

STCL

LTCL

Step 4 – Report in Schedule CG

Enter the relevant transaction details under the appropriate category in Schedule CG.

Step 5 – Complete Schedule 112A

Where applicable, report qualifying equity share, equity-oriented mutual fund and business trust transactions in Schedule 112A.

Step 6 – Verify Tax Computation

After completing the schedules, review:

Total income

Capital gains

Capital losses

Applicable special-rate taxation

TDS

Advance tax

Self-assessment tax

Refund or tax payable

Documents to Keep for ITR Filing

Taxpayers having capital gains should preferably maintain the following records:

For Shares

Broker capital gains statement

Contract notes

Demat statement

Purchase records

Sale records

For Mutual Funds

CAS

Mutual fund capital gains statement

Transaction statement

Redemption statements

For Property

Purchase deed

Sale deed

Stamp valuation details

Improvement bills

Brokerage bills

Legal expenses, where eligible

Details of reinvestment, if claiming an applicable exemption

Common Mistakes While Reporting Capital Gains

Reporting Only the Profit

Taxpayers sometimes enter only the net profit without maintaining the underlying transaction details.

A proper capital gains working should be prepared before entering figures in the ITR.

Ignoring Capital Losses

Capital losses should be properly reported where applicable because eligible losses may have future tax value.

Incorrect Holding Period

The holding period must be determined according to the rules applicable to the specific asset.

Not Reconciling with Broker Statements

The capital gains reported in the ITR should be reconciled with broker, demat and mutual fund statements.

Incorrect Property Reporting

For property transactions, taxpayers should carefully verify sale consideration, stamp duty value, purchase cost, improvement cost and ownership percentage.

Relying Blindly on AIS

AIS and other pre-filled information can be useful for reconciliation, but taxpayers should independently verify the information against their actual records and transaction statements.

ITR-2 Filing – Online and Offline Options

The Income Tax Department provides online filing facilities for ITR-2. It also provides an Excel-based utility for AY 2026-27.

The Department’s downloads section currently lists the AY 2026-27 ITR-2 Excel utility, with the latest listed version released on 17 July 2026.

Taxpayers should use the latest available utility/version at the time of filing.

Final Checklist Before Filing ITR-2

Before submitting the return, verify:

All share transactions have been considered.

Mutual fund redemptions have been reconciled.

Property transactions have been correctly reported.

STCG and LTCG have been separately identified.

Capital losses have been considered.

Schedule 112A has been completed wherever applicable.

Purchase costs and transfer expenses have been verified.

Property stamp duty value has been checked.

TDS has been reconciled with Form 26AS/AIS.

Bank account details are correct.

Tax payable/refund has been verified.

Conclusion

For taxpayers with capital gains, ITR-2 for AY 2026-27 provides dedicated schedules for reporting gains from shares, mutual funds, property and other capital assets.

The most important aspect is not merely entering the final capital gain figure but ensuring that the underlying transactions are correctly classified, reconciled and reported in the appropriate schedules.

Investors should obtain their broker and mutual fund statements, maintain proper property documentation, calculate capital gains asset-wise, and carefully review Schedule CG and Schedule 112A before submitting the return.