21 March 2026 · 49Tax
Capital Gains Tax on Stocks & Mutual Funds: ITR-2 Guide
How capital gains from stocks, mutual funds, and other assets are taxed in India. Covers STCG, LTCG, exemptions, and how to report them in ITR-2.
Do You Need to File ITR-2?
If you sold any stocks, mutual fund units, property, or other capital assets during the financial year, you must file ITR-2 (not ITR-1). This applies even if you made a loss — because you need ITR-2 to carry forward capital losses for set-off in future years.
Not sure which form to use? See ITR-1 vs ITR-2.
Types of Capital Gains
Short-Term Capital Gains (STCG)
Assets held for a shorter period than the specified threshold:
| Asset Type | Short-Term If Held Less Than |
|---|---|
| Listed equity shares | 12 months |
| Equity mutual funds | 12 months |
| Debt mutual funds | 24 months |
| Real estate | 24 months |
| Gold / gold ETFs | 24 months |
| Unlisted shares | 24 months |
Long-Term Capital Gains (LTCG)
Assets held beyond the short-term threshold are classified as long-term.
Tax Rates (AY 2026-27)
| Type | Tax Rate | Notes |
|---|---|---|
| STCG on listed equity (Section 111A) | 20% | Where STT is paid |
| STCG on other assets | Per slab rate | Added to total income |
| LTCG on listed equity (Section 112A) | 12.5% | Exemption of Rs 1.25 lakh per year |
| LTCG on other assets (Section 112) | 12.5% | With indexation benefit where applicable |
All tax amounts are subject to an additional 4% health and education cess.
LTCG Exemption: Rs 1.25 Lakh
For listed equity and equity mutual funds, LTCG up to Rs 1.25 lakh per financial year is exempt. Tax at 12.5% applies only on gains above this threshold.
Example: You sold equity mutual funds with LTCG of Rs 2,00,000.
- Exempt: Rs 1,25,000
- Taxable: Rs 75,000
- Tax: Rs 75,000 × 12.5% = Rs 9,375 + 4% cess = Rs 9,750
How to Calculate Capital Gains
For Stocks and Equity Mutual Funds
STCG = Sale price – Purchase price – Brokerage
LTCG = Sale price – Purchase price – Brokerage
(Indexation not available for listed equity since Budget 2024)
For Debt Mutual Funds and Other Assets
LTCG = Sale price – Indexed cost of acquisition – Transfer expenses
Indexation adjusts your purchase price for inflation using the Cost Inflation Index (CII).
Reporting in ITR-2
Capital gains are reported in Schedule CG of ITR-2. You need:
- Broker P&L statement or contract notes — for stocks and mutual funds
- Capital gains statement from your AMC — for mutual fund redemptions
- Sale and purchase deeds — for property transactions
Key Schedules in ITR-2
| Schedule | What to Report |
|---|---|
| Schedule CG | All capital gains and losses, broken down by asset type |
| Schedule 112A | LTCG from listed equity — scrip-wise details |
| Schedule 115AD | For non-residents (FPIs) |
| Schedule BFLA | Brought-forward losses being set off |
| Schedule CFL | Carry-forward of current year losses |
Setting Off Capital Losses
- STCG losses can be set off against both STCG and LTCG
- LTCG losses can be set off only against LTCG
- Unabsorbed losses can be carried forward for 8 years
- You must file the ITR before the due date to carry forward losses
This is why filing ITR-2 matters even when you only have losses.
Common Mistakes
- Not reporting exempt LTCG — even gains below Rs 1.25 lakh must be disclosed in Schedule 112A
- Mixing up holding periods — equity is 12 months, debt/property is 24 months
- Forgetting dividend income — dividends are taxed as "income from other sources," not capital gains
- Using ITR-1 with capital gains — the portal will reject or you will get a defective return notice
How 49Tax Handles Capital Gains
Upload your broker P&L statement or capital gains statement when filing with 49Tax. The AI extracts your trade details, classifies gains as short-term or long-term, and populates Schedule CG automatically.
The tool also computes whether the old or new regime is better for your overall tax including capital gains. See regime comparison.