ITR-2 Filing with Capital Gains 2026 — Complete Guide

If you sold stocks, mutual funds, or property in FY 2025-26, you must file ITR-2 — you cannot use the simpler ITR-1. This guide walks through exactly how to report capital gains in ITR-2.

Deadline: July 31, 2026 for most individuals.

Who Must File ITR-2?

File ITR-2 if you have:

• ✅ Capital gains from equity/mutual funds/property
• ✅ Income from more than one house property
• ✅ Foreign income or foreign assets
• ✅ Income from winnings (lottery, gambling)
• ✅ Agricultural income above ₹5,000
• ✅ Total income above ₹50 lakh

If you only have salary + interest income (no capital gains): File ITR-1 instead.

Capital Gains Tax Rates 2026 (Budget 2024 Revised)

Rates effective from Budget 2024. LTCG on equity: Exemption increased to ₹1.25 lakh/year.

Get Capital Gains Statement

Before filing, get your capital gains statement:

Filing ITR-2 — Step by Step

Step 1: Login to Income Tax Portal

1. incometax.gov.in → Login
2. e-File → Income Tax Returns → File Income Tax Return
3. Assessment Year: 2026-27
4. Filing Mode: Online
5. Status: Individual → ITR-2 (selected automatically if capital gains detected)

Step 2: Fill Salary and Other Income

Same as ITR-1:

• Salary from Form 16 (pre-filled)
• Bank interest from AIS
• House property income (rental or loss)

Step 3: Fill Schedule Capital Gains (Schedule CG)

This is the key section for capital gains:

Section A — Equity LTCG

1. Short-term capital gains (STCG) from equity MF/stocks → Enter gross amount
2. Enter: Sale value, cost of acquisition, indexed cost (if applicable)
3. LTCG from equity above ₹1.25 lakh → 12.5% tax
4. Gains up to ₹1.25 lakh: Exempt — enter in deduction row

Section B — Equity STCG

1. Enter STCG from equity/equity MF
2. STCG taxed at 20%

Section C — Debt / Other MF Capital Gains

1. Enter LTCG and STCG from debt mutual funds, gold ETFs
2. Taxed at slab rate

Section D — Property Capital Gains

1. Enter: Sale price, cost of acquisition, cost of improvement, date of purchase/sale
2. ITR-2 calculates LTCG/STCG automatically
3. For LTCG property: Indexation calculation available (enter cost inflation index values)

Step 4: Capital Gains Exemptions

If you reinvested LTCG to save tax:

Enter exemption amount in respective sections of Schedule CG.

Step 5: Review Total Tax Calculation

After entering all capital gains:

• Portal shows: Total income → Tax on total income → Tax on capital gains (separate rate)
• Adjust: TDS already deducted (from 26AS)
• Net: Tax payable or refund

Step 6: Pay Tax and Submit

1. If tax due > TDS paid: Pay via Challan 280 (net banking/UPI)
2. Review complete ITR-2 → Submit → E-verify with Aadhaar OTP

Capital Gains from Mutual Funds — Detailed Guide

LTCG Calculation Example (Equity MF)

• Units purchased: 1,000 units at ₹50 NAV = ₹50,000 invested (July 2023)
• Units sold: 1,000 units at ₹80 NAV = ₹80,000 received (August 2025)
• Holding period: > 12 months → LTCG applies
• Gain = ₹80,000 − ₹50,000 = ₹30,000
• Exempt up to ₹1.25 lakh → If total LTCG from all equity investments is < ₹1.25 lakh: Zero tax
• If total LTCG > ₹1.25 lakh: 12.5% on excess

STCG Calculation (Equity MF Sold within 12 Months)

• Units purchased at ₹100 NAV (January 2026) → Sold at ₹120 NAV (May 2026)
• Holding: 4 months → STCG
• Gain = ₹20/unit × 500 units = ₹10,000
• Tax: 20% of ₹10,000 = ₹2,000

Advance Tax — Are You Required to Pay?

If total tax liability exceeds ₹10,000 in a financial year, advance tax must be paid:

For capital gains realized later in the year: Pay advance tax in the nearest quarter. Non-payment attracts interest at 1%/month under Section 234B and 234C.

Frequently Asked Questions

I sold mutual funds but gains are below ₹1.25 lakh LTCG exemption — do I still need to file ITR-2? Yes — you must file ITR-2 if you have capital gains (even if tax is zero). Report in Schedule CG with exemption claimed.

My broker shows different capital gains than what the portal pre-fills — which to use? Use your broker's detailed capital gains statement (from Console/Reports) as it's the most accurate. The portal may not pre-fill correctly for all transactions. Enter manually if needed.

I bought shares in different tranches — how do I calculate cost for LTCG? FIFO (First In First Out) method applies for all equity and mutual fund capital gains in India. Your broker's capital gains statement automatically uses FIFO — use those figures.

Property sold — LTCG with or without indexation? Budget 2024 changed: For properties sold after July 23, 2024: 12.5% LTCG WITHOUT indexation (mandatory). For properties sold before July 23, 2024: 20% with indexation (old rule applies). ITR-2 has both options — choose correctly based on your sale date.

Can I offset capital losses from one investment against gains from another? Yes — STCG losses can offset STCG gains. LTCG losses can offset LTCG gains. You cannot set off STCG loss against LTCG gain. Debt fund losses can offset debt fund gains (same category). Unused losses can be carried forward 8 years.