ITR Filing: How to report capital gains while filing income tax return

A capital gain arises when you sell an investment asset for a profit, such as shares and mutual funds. Essentially, it is the difference between the sale and purchase prices. Conversely, a capital loss occurs when you sell an asset for a price less than the price you bought.

Capital gains can be bifurcated into two categories based on the holding period of investment assets: long-term capital gain and short-term capital gain. Long-term capital gains are taxed at 10% if the gain exceeds Rs 1 lakh, while short-term capital gains are taxed at 15%.

A broker provides you with a capital gains statement towards the end of the financial year. This document is a crucial record of your investment activities and their tax implications during the year. This statement includes details such as account information, transaction history (including date of purchase, date of sale, description of asset, quantity, buy value, sell value, profit/loss), capital gains/losses, among others.

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“After understanding the capital gains statement, it is time to incorporate this information into your tax return. If an individual has any capital gains/losses during the year, Form ITR 2 (in the case of capital gains) or ITR 3 (in the case of capital gains and business income) is applicable. Schedule CG is the schedule in which an individual must provide the required information about capital gains/losses,” informs CA Naveen Wadhwa, Vice-President, Taxmann.

If you have long-term capital gains from listed shares or units of mutual funds, you must mention this information in Schedule 112A first before proceeding to Schedule CG.

How to fill in the information in Schedule CG or Schedule 112A?

For capital gains/losses from the sale of shares and units of mutual funds, you require the total sale and buy value, which is directly filed in Schedule CG.

However, “for long-term capital gains/losses arising from the sale of shares and units of mutual funds purchased on or before 31-01-2018, you are required to mention script-wise details (like Reliance, TCS, IOC, HDFC MF, etc.), including its quantity, ISIN code, sales price, cost of acquisition, etc., in Schedule 112A. After that, this information is automatically reflected in Schedule CG,” informs Wadhwa.