The Income Tax Return filing process for FY 2025-26 (AY 2026-27) brings an important change for taxpayers reporting capital gains.
\n
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.
\n
This is relevant for individuals and HUFs having capital gains from shares, mutual funds, securities, property and other capital assets.
\n
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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________________________________________________________________________________
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\ud83e\uddfe What Is ITR-2?
\n
ITR-2 is applicable to Individuals and HUFs who do not have income from Profits and Gains of Business or Profession.
\n
It can be used where the taxpayer has income from:
\n
\u2022\tSalary or pension
\n
\u2022\tHouse property
\n
\u2022\tCapital gains
\n
\u2022\tOther sources
\n
\u2022\tAgricultural income exceeding \u20b95,000
\n
\u2022\tForeign assets\/income, where applicable
\n
It can also be used by individuals who are directors in companies or have held unlisted equity shares, subject to the applicable conditions.
\n
Therefore, if an individual has salary income + share-market capital gains, but no business\/professional income, ITR-2 may be the appropriate return.
\n
________________________________________________________________________________
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\ud83d\udd04 What Has Changed in ITR-2 for FY 2025-26?
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One of the key changes is in Schedule CG \u2014 Capital Gains.
\n
Earlier, taxpayers had to deal with a significant reporting distinction based on the date of transfer:
\n
Before 23 July 2024
\n
and
\n
On or after 23 July 2024
\n
This was introduced because the Finance (No. 2) Act, 2024 changed several capital-gains provisions effective from 23 July 2024.
\n
For AY 2026-27, the Income Tax Department has removed this date-based bifurcation from Schedule CG.
\n
This makes the return reporting process considerably cleaner.
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________________________________________________________________________________
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\ud83d\udcc5 Why Was 23 July 2024 Important?
\n
The date 23 July 2024 became important because several capital-gains provisions were changed from that date.
\n
The changes included:
\n
\u2022\tRevision in long-term capital-gains tax rate
\n
\u2022\tChanges in short-term capital-gains taxation for specified securities
\n
\u2022\tChanges in holding-period rules
\n
\u2022\tRemoval of indexation benefit in many cases
\n
\u2022\tChanges concerning immovable property
\n
\u2022\tChanges in the Section 112A exemption threshold
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As a result, earlier ITR forms required taxpayers to report transactions separately based on the date of transfer.
\n
For AY 2025-26, this created additional complexity when preparing Schedule CG.
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For AY 2026-27, the ITR has been redesigned to remove that particular date-based reporting split.
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________________________________________________________________________________
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\ud83d\udcca How Was Capital Gains Reporting Earlier?
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Under the earlier ITR structure, capital-gains reporting could require separate details depending on whether the transfer took place:
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Before 23 July 2024
\n
or
\n
On\/after 23 July 2024
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This was particularly relevant for taxpayers with transactions spanning both periods.
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For example, an investor who sold:
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\u2022\tShares in June 2024
\n
\u2022\tMutual funds in September 2024
\n
\u2022\tProperty in December 2024
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could encounter separate reporting requirements because the applicable capital-gains provisions differed across the cut-off date.
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The revised ITR-2 removes this particular date-based bifurcation.
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________________________________________________________________________________
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\ud83c\udd95 What Does the Revised Schedule CG Do?
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The new Schedule CG focuses more directly on the type of capital asset and nature of gain.
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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.
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However, for land\/building, the computation must be entered separately for each property.
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This is an important practical change to keep in mind while preparing the return.
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________________________________________________________________________________
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\ud83c\udfe0 Special Reporting for Sale of Land or Building
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Taxpayers selling immovable property need to be particularly careful.
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For other assets of the same category, the ITR allows consolidation in the manner prescribed.
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But for land or building, the ITR-2 instructions specifically state that computation must be entered separately for each land\/building.
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So if a taxpayer sold:
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Property 1 \u2014 Delhi
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Property 2 \u2014 Noida
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Property 3 \u2014 Gurgaon
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the capital-gains computation should not simply be clubbed into one generic property entry.
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Each property needs to be appropriately reported.
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________________________________________________________________________________
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\ud83d\udcc8 Short-Term vs Long-Term Capital Gains
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The revised Schedule CG continues to distinguish between:
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Short-Term Capital Gain (STCG)
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and
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Long-Term Capital Gain (LTCG)
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The correct classification depends on the nature of the asset and the applicable holding-period rules.
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The ITR-2 manual specifically provides for reporting both short-term and long-term capital gains\/losses for the different categories of capital assets.
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Therefore, removing the 23 July 2024 bifurcation does not mean that STCG and LTCG are combined.
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The taxpayer still needs to correctly determine:
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Nature of asset \u2192 Holding period \u2192 STCG\/LTCG \u2192 Applicable tax rate
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________________________________________________________________________________
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\ud83d\udcca What Are the Major Capital Gains Categories?
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While completing Schedule CG, taxpayers may encounter different categories for assets such as:
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\ud83c\udfe0 Land & Building
\n
Capital gains from sale of:
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\u2022\tResidential property
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\u2022\tCommercial property
\n
\u2022\tLand
\n
\u2022\tOther immovable property
\n
\ud83d\udcc8 Equity Shares
\n
Sale of listed\/unlisted equity shares may have different tax treatment depending on the circumstances.
\n
\ud83d\udcca Equity-Oriented Mutual Funds
\n
Units of equity-oriented mutual funds may be subject to the special capital-gains provisions.
\n
\ud83d\udcb0 Other Securities
\n
This can include various securities and investment instruments depending on their classification.
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\ud83e\ude99 Other Capital Assets
\n
Other assets may include:
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\u2022\tGold
\n
\u2022\tJewellery
\n
\u2022\tBonds
\n
\u2022\tDebt-oriented investments
\n
\u2022\tOther investments
\n
\u2022\tPersonal capital assets that qualify under the Act
\n
The appropriate Schedule CG section should be selected based on the asset and transaction.
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________________________________________________________________________________
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\ud83d\udcd1 Schedule 112A Still Matters
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The revised ITR-2 continues to have Schedule 112A.
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Schedule 112A is relevant for specified long-term capital gains from:
\n
\u2022\tEquity shares of a company
\n
\u2022\tUnits of equity-oriented mutual funds
\n
\u2022\tUnits of business trusts
\n
where the relevant STT conditions are satisfied.
\n
The ITR-2 user manual specifically lists Schedule 112A separately from Schedule CG.
\n
Therefore, taxpayers should not assume that all equity-related capital gains can simply be entered in one place.
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________________________________________________________________________________
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\ud83e\uddee Example \u2014 Equity Shares Sold During FY 2025-26
\n
Suppose an individual has:
\n
Purchase value of listed shares: \u20b94,00,000
\n
Sale value: \u20b96,50,000
\n
Capital gain: \u20b92,50,000
\n
The taxpayer needs to determine:
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\u2022\tWhether the gain is STCG or LTCG
\n
\u2022\tWhether the shares fall under the relevant special provisions
\n
\u2022\tWhether STT conditions are satisfied
\n
\u2022\tWhether Schedule 112A is applicable
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\u2022\tThe applicable tax rate
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\u2022\tThe relevant exemption threshold, where applicable
\n
The transaction is then reported in the appropriate capital-gains schedule.
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________________________________________
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\ud83c\udfe0 Example \u2014 Sale of Property
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Suppose a taxpayer sells a residential property during FY 2025-26.
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The taxpayer should calculate:
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Full value of consideration
\n
Less:
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Transfer expenses
\n
Less:
\n
Cost of acquisition
\n
Less:
\n
Eligible improvement cost
\n
= Capital Gain
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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.
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The ITR-2 instructions specifically require separate computation for each transfer of land\/building.
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________________________________________________________________________________
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\u26a0\ufe0f Do Not Use the Old 23 July 2024 Split
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This is one of the most important points for AY 2026-27.
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If you are preparing ITR-2 for FY 2025-26, do not blindly use the old format that asks you to divide transactions into:
\n
Before 23 July 2024
\n
and
\n
After 23 July 2024
\n
The Income Tax Department has expressly stated that this bifurcation has been removed for AY 2026-27.
\n
The taxpayer should instead use the revised Schedule CG applicable for AY 2026-27.
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________________________________________________________________________________
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\ud83d\udcc9 What About Capital Losses?
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The revised ITR-2 also requires proper reporting of capital losses.
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This includes:
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\u2022\tShort-term capital loss
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\u2022\tLong-term capital loss
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\u2022\tCurrent-year loss
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\u2022\tBrought-forward capital loss
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\u2022\tLoss adjustment, where permitted
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\u2022\tLoss to be carried forward
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The taxpayer should not simply enter the net figure without maintaining the underlying transaction-wise working.
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This is particularly important where there are multiple purchases and sales during the year.
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________________________________________________________________________________
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\ud83d\udd04 Capital Loss Set-Off
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Capital losses are subject to specific set-off rules.
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Generally:
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Short-Term Capital Loss
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Can be adjusted against eligible short-term as well as long-term capital gains, subject to the applicable provisions.
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Long-Term Capital Loss
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Can generally be adjusted only against long-term capital gains.
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Any eligible unabsorbed capital loss may be carried forward subject to the prescribed conditions and filing requirements.
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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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________________________________________________________________________________
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\ud83e\uddfe Don’t Rely Only on AIS for Capital Gains
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Another important practical point is reconciliation.
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Before filing ITR-2, taxpayers should reconcile capital-gains information using available records such as:
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Broker statement
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Contract notes
\n
Capital-gains statement
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Mutual fund statement
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Demat statement
\n
AIS
\n
TIS
\n
Bank statement
\n
The figures reported in AIS may not always be sufficient to determine the actual taxable capital gain.
\n
For example, AIS may show transaction information, but calculating capital gain may require:
\n
Sale consideration + purchase cost + transfer expenses + acquisition date + applicable tax rules
\n
Therefore, the broker’s capital-gains statement should be used along with the taxpayer’s own records.
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________________________________________________________________________________
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\ud83c\udfe6 What About Shares Purchased Through Multiple Transactions?
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Suppose you purchased the same stock several times:
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100 shares in April
\n
150 shares in July
\n
200 shares in November
\n
and subsequently sold:
\n
250 shares
\n
The taxpayer should determine the correct acquisition cost and applicable matching methodology based on the nature of the securities and applicable tax rules.
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Simply taking the average purchase price without checking the applicable rules can result in an incorrect capital-gains calculation.
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________________________________________________________________________________
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\ud83d\udcbb ITR-2 Online Filing \u2014 Capital Gains Section
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The Income Tax Department’s ITR-2 online service includes a dedicated:
\n
Schedule Capital Gains
\n
section.
\n
The current ITR-2 structure also contains:
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\u2022\tSchedule CG
\n
\u2022\tSchedule 112A
\n
\u2022\tSchedule 115AD(1)(iii) proviso
\n
\u2022\tSchedule VDA
\n
\u2022\tSchedule Other Sources
\n
\u2022\tSchedule CYLA
\n
\u2022\tSchedule BFLA
\n
\u2022\tSchedule CFL
\n
\u2022\tSchedule FSI
\n
\u2022\tSchedule TR
\n
\u2022\tSchedule FA
\n
\u2022\tSchedule AL
\n
among others.
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This means capital gains should be considered alongside the taxpayer’s other schedules rather than as an isolated calculation.
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________________________________________________________________________________
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\ud83c\udf0d Capital Gains for NRIs
\n
Non-resident taxpayers may also use ITR-2 where eligible.
\n
However, additional considerations can arise for:
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\u2022\tSale of Indian shares
\n
\u2022\tSale of Indian property
\n
\u2022\tSecurities
\n
\u2022\tDTAA
\n
\u2022\tSpecial tax rates
\n
\u2022\tTDS
\n
\u2022\tRepatriation
\n
\u2022\tForeign assets
\n
\u2022\tForeign income
\n
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.
\n
Therefore, NRIs should not simply copy the capital-gains calculation of a resident taxpayer.
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________________________________________________________________________________
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\ud83e\ude99 What About Virtual Digital Assets?
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ITR-2 also contains a separate Schedule VDA.
\n
This is important for taxpayers reporting income from virtual digital assets.
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The ITR-2 user manual lists Schedule VDA separately from Schedule CG.
\n
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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________________________________________________________________________________
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\ud83d\udccc Why the Revised Schedule Is Important
\n
The revised structure is useful because it reduces one major source of complexity.
\n
Previously, taxpayers and professionals had to carefully track the 23 July 2024 date while entering capital-gains details.
\n
For FY 2025-26, transactions fall entirely within the post-23 July 2024 tax framework.
\n
Therefore, the revised ITR-2 does not need the earlier date-based split.
\n
This makes the return:
\n
Simpler to prepare
\n
Easier to reconcile
\n
Less prone to date-based reporting errors
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________________________________________________________________________________
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\u26a0\ufe0f Common Mistakes While Filing ITR-2 for Capital Gains
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\u274c Mistake 1 \u2014 Using Last Year’s ITR Format
\n
Do not copy the capital-gains schedule from AY 2025-26 and assume the structure is identical.
\n
The Income Tax Department has revised Schedule CG for AY 2026-27.
\n
\u274c Mistake 2 \u2014 Applying the 23 July 2024 Split
\n
This bifurcation has been removed for AY 2026-27.
\n
\u274c Mistake 3 \u2014 Combining All Capital Gains
\n
STCG and LTCG need to be appropriately classified.
\n
\u274c Mistake 4 \u2014 Combining Multiple Properties
\n
Land\/building transactions need separate computation for each property.
\n
\u274c Mistake 5 \u2014 Ignoring Schedule 112A
\n
Specified equity and equity-oriented mutual-fund LTCG may require Schedule 112A.
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\u274c Mistake 6 \u2014 Using Sale Value as Capital Gain
\n
Capital gain is not simply the sale consideration.
\n
The acquisition cost and other applicable adjustments need to be considered.
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\u274c Mistake 7 \u2014 Ignoring Capital Losses
\n
Current-year and brought-forward losses need to be properly considered for set-off and carry-forward.
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\u274c Mistake 8 \u2014 Filing ITR-2 When Business Income Exists
\n
ITR-2 is not meant for individuals\/HUFs having income chargeable under Profits and Gains of Business or Profession.
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________________________________________________________________________________
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\ud83d\udcdd Step-by-Step Process to Prepare Schedule CG
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Step 1 \u2014 Collect All Investment Statements
\n
Download:
\n
\u2022\tBroker capital-gains statement
\n
\u2022\tMutual-fund capital-gains statement
\n
\u2022\tDemat statement
\n
\u2022\tContract notes
\n
\u2022\tProperty purchase\/sale documents
\n
________________________________________
\n
Step 2 \u2014 Reconcile Transactions
\n
Compare the investment records with:
\n
\u2022\tAIS
\n
\u2022\tTIS
\n
\u2022\tBank statements
\n
________________________________________
\n
Step 3 \u2014 Classify Assets
\n
Separate:
\n
\u2022\tEquity shares
\n
\u2022\tMutual funds
\n
\u2022\tSecurities
\n
\u2022\tProperty
\n
\u2022\tGold\/jewellery
\n
\u2022\tOther capital assets
\n
\u2022\tVDA, where applicable
\n
________________________________________
\n
Step 4 \u2014 Determine STCG\/LTCG
\n
Apply the relevant holding-period and asset-specific rules.
\n
________________________________________
\n
Step 5 \u2014 Calculate Gains\/Losses
\n
Determine the correct:
\n
Sale consideration
\n
Cost
\n
Transfer expenses
\n
Applicable adjustments
\n
Capital gain\/loss
\n
________________________________________
\n
Step 6 \u2014 Report in Schedule CG
\n
Use the revised AY 2026-27 structure.
\n
________________________________________
\n
Step 7 \u2014 Complete Schedule 112A Where Applicable
\n
Specified equity\/equity-oriented fund transactions should be reported appropriately.
\n
________________________________________
\n
Step 8 \u2014 Check Set-Off
\n
Adjust eligible capital losses against eligible gains.
\n
________________________________________
\n
Step 9 \u2014 Check Carry-Forward Loss
\n
Determine whether any remaining eligible loss needs to be carried forward.
\n
________________________________________
\n
Step 10 \u2014 Cross-Check Final Tax
\n
Verify that the capital-gains tax calculated in the return agrees with the working papers.
\n
________________________________________________________________________________
\n
\ud83d\udccc Important: FY 2025-26 vs AY 2026-27
\n
There is sometimes confusion because FY 2025-26 and AY 2026-27 are used together.
\n
For income earned from:
\n
1 April 2025 to 31 March 2026
\n
the corresponding return is:
\n
AY 2026-27
\n
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.
\n
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.
\n
________________________________________________________________________________
\n
\ud83d\udd0d Current ITR-2 Availability
\n
The Income Tax Department has made the AY 2026-27 ITR-2 utility available.
\n
The downloads page currently shows an Excel-based ITR-2 utility, with the latest listed version released on 31 July 2026.
\n
The online ITR-2 service is also available through the e-Filing portal.
\n
This is important because taxpayers should use the latest available utility\/schema rather than relying on an older downloaded version.
\n
________________________________________________________________________________
\n
\ud83c\udfaf Key Takeaways
\n
The most important points for ITR-2 AY 2026-27 are:
\n
\u2705 ITR-2 applies to eligible Individuals and HUFs who do not have business\/professional income.
\n
\u2705 Schedule CG has been revised.
\n
\u2705 The earlier before\/after 23 July 2024 capital-gains bifurcation has been removed for AY 2026-27.
\n
\u2705 STCG and LTCG still need to be correctly classified.
\n
\u2705 Capital gains from different asset categories are separately identified within Schedule CG.
\n
\u2705 For land\/building, separate computation is required for each property.
\n
\u2705 Schedule 112A continues to be relevant for specified equity\/equity-oriented fund transactions.
\n
\u2705 VDA transactions have a separate Schedule VDA.
\n
\u2705 Capital-gains figures should be reconciled with broker statements, AIS\/TIS and supporting documents.
\n
\u2705 Always use the latest ITR utility\/schema available on the Income Tax Department portal.
\n
________________________________________________________________________________
\n
\ud83c\udfc1 Final Thoughts
\n
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.
\n
However, the simplification in the form does not eliminate the need for a detailed capital-gains working.
\n
Taxpayers should still correctly determine:
\n
Type of asset \u2192 Date of acquisition \u2192 Date of transfer \u2192 Holding period \u2192 STCG\/LTCG \u2192 Cost \u2192 Transfer expenses \u2192 Applicable tax rate \u2192 Set-off\/carry-forward of losses \u2192 Correct ITR schedule
\n
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.
\n
And most importantly, don’t simply copy last year’s Schedule CG into this year’s return\u2014the AY 2026-27 form has specifically changed the reporting structure.
\n
________________________________________________________________________________
\n
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Helping individuals and businesses simplify accounting, taxation and compliance. \ud83c\uddee\ud83c\uddf3<\/p>\n","protected":false},"excerpt":{"rendered":"
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