Filing ITR for Capital Gains from Shares and Mutual Funds
- PRITI SIRDESHMUKH
- Oct 4
- 9 min read
Filing Income Tax Returns (ITR) for capital gains from shares and mutual funds requires careful reporting of profits earned from investments. Accurate declaration ensures compliance with the Income Tax Act, avoids penalties, and maximizes tax efficiency. With multiple sources of capital gains—short-term and long-term—investors often face confusion over reporting requirements, calculations, and applicable exemptions. Online platforms like TaxBuddy simplify this process by providing automated pre-filling, expert guidance, and seamless filing options. Understanding the key steps and leveraging these tools makes ITR filing for capital gains efficient, accurate, and stress-free.
Table of Contents
Understanding Capital Gains from Shares and Mutual Funds
Capital gains arise when an individual or entity sells a capital asset, such as shares, mutual funds, or other investments, at a price higher than the purchase price. In the context of shares and mutual funds, capital gains are primarily realised when stocks, equity mutual funds, or debt mutual funds are sold in the market. A proper understanding of capital gains is essential, as incorrect reporting can lead to penalties or delayed refunds. The Income Tax Act distinguishes between short-term and long-term gains, each with its own tax rates and reporting requirements. Accurate calculation of the cost of acquisition, sale consideration, and holding period is critical to ensure compliance. Using digital platforms like TaxBuddy can simplify this process by automatically integrating transaction data from brokers, fund houses, and the Annual Information Statement (AIS).
Types of Capital Gains: Short-Term vs Long-Term
Short-term capital gains (STCG) occur when shares or equity mutual funds are sold within 12 months of acquisition. STCG on listed equity shares and equity mutual funds is taxed at 15% under the Income Tax Act. Other assets may have different rates based on the type of asset and holding period.
Long-term capital gains (LTCG) arise when assets are held for more than 12 months before being sold. LTCG exceeding ₹1 lakh from listed equity shares or equity mutual funds is taxed at 10% without the benefit of indexation. For debt mutual funds, LTCG is taxed at 20% with indexation, allowing inflation adjustment on the purchase price.
Understanding these classifications ensures correct tax computation and reporting in your ITR.
How to Report Capital Gains in ITR
Capital gains must be reported in the ITR under the “Capital Gains” section. For shares and mutual funds, details such as date of acquisition, date of sale, cost of acquisition, sale consideration, and any exemptions claimed (like under Sections 54EC, 54F) need to be accurately filled.
Investors can refer to broker statements, demat account statements, and mutual fund consolidated account statements to collect this data. Filing capital gains correctly ensures that refunds are processed promptly and reduces the risk of notices from the Income Tax Department.
Platforms like TaxBuddy automatically pre-fill capital gains data wherever possible, reducing manual errors and ensuring seamless filing.
Auto-Filling Capital Gains Using Online Platforms
Online platforms like TaxBuddy have simplified the process of reporting capital gains by integrating directly with broker and fund data, as well as the AIS. Users can upload their consolidated statements or link their PAN with their investment accounts.
The platform automatically populates STCG and LTCG fields, calculates tax liabilities, and suggests applicable exemptions. This reduces manual effort, ensures accuracy, and saves significant time during ITR filing. The pre-filled data also helps in avoiding mismatches with the Income Tax Department’s records, which is a common cause of delays in refund processing.
TaxBuddy: Simplifying Capital Gains ITR Filing
TaxBuddy streamlines the filing of ITR for investors with capital gains. The platform provides both self-filing and expert-assisted options. For complex cases, such as multiple fund redemptions or cross-asset capital gains, TaxBuddy ensures accurate computation and reporting while guiding users through exemptions, deductions, and compliance requirements.
With its AI-driven interface, the platform also highlights potential errors before submission, calculates tax automatically, and integrates with the Income Tax Department’s e-filing portal for direct filing. TaxBuddy’s approach reduces the stress associated with capital gains reporting, ensuring a seamless filing experience.
Common Mistakes to Avoid When Filing Capital Gains
Filing capital gains accurately is crucial to avoid unnecessary tax liabilities and scrutiny from the Income Tax Department. One common mistake taxpayers make is the incorrect classification of gains. Confusing short-term capital gains with long-term capital gains can lead to errors in tax calculation, as the tax rates for each type differ significantly. Short-term gains are typically taxed at the individual’s slab rate or a flat rate, depending on the asset, while long-term gains benefit from concessional rates and possible exemptions, making correct classification essential.
Another frequent error is missing TDS or brokerage adjustments. When calculating capital gains, it is important to account for any Tax Deducted at Source on sale proceeds and brokerage or transaction charges paid. Ignoring these adjustments can inflate the taxable gain, resulting in higher tax liability.
Failure to report all transactions is also a significant issue. Every sale of stocks, mutual funds, or property must be accurately reported in the return to match the details available in the Annual Information Statement (AIS). Any omission can trigger notices or mismatches that delay refunds or lead to additional scrutiny.
Additionally, many taxpayers overlook available exemptions. Sections 54, 54EC, and 54F provide relief for certain capital gains, such as reinvestment in residential property or specified bonds. Not claiming these exemptions can result in paying unnecessary tax.
Manual calculation errors are another major pitfall. Miscalculations related to the cost of acquisition, indexation benefits, or sale proceeds can create mismatches with the Income Tax Department records, potentially delaying refund processing or attracting penalties.
Platforms like TaxBuddy help taxpayers avoid these common mistakes by auto-filling accurate data, integrating TDS and brokerage adjustments, and flagging discrepancies before submission. This ensures error-free filing, reduces compliance risks, and simplifies the entire process of reporting capital gains.
Deductions and Exemptions Applicable to Capital Gains
Certain exemptions reduce taxable capital gains, including:
Section 54: Exemption for LTCG from sale of property when invested in a residential property.
Section 54EC: Exemption on investment in specified bonds for LTCG.
Section 54F: Exemption for capital gains on long-term sale of assets when proceeds are invested in residential property.
These exemptions apply only under specified conditions and require correct reporting in ITR. TaxBuddy automatically calculates eligible deductions, ensuring compliance.
Deadlines and Penalties for Late Filing
For FY 2024-25 (AY 2025-26), filing deadlines are:
Individuals/non-audit assessees: September 15, 2025
Audit-assessed businesses: October 31, 2025
Belated returns: December 31, 2025 (with penalties)
Late filing attracts penalties up to ₹5,000 under Section 234F and interest under Section 234A/B/C. Timely filing also ensures quicker refund processing.
How Capital Gains Are Taxed Under Old vs New Regime
Old Tax Regime: LTCG on equity shares exceeding ₹1 lakh taxed at 10%, STCG at 15%, and eligible deductions under Sections 54, 54EC, and 54F can be claimed.
New Tax Regime: Capital gains taxation remains similar, but tax benefits under exemptions may not be available unless specified in the regime.
It’s important to clarify which regime you are filing under before calculating tax and exemptions.
Tips for Smooth Filing and Accurate Reporting
To ensure smooth filing and accurate reporting of your Income Tax Return, start by reconciling your broker and mutual fund statements with the Annual Information Statement (AIS). The AIS reflects all TDS, capital gains, dividend income, and other financial transactions reported to the Income Tax Department. By cross-checking these statements against your AIS, you can identify any discrepancies early and avoid issues during processing.
Maintain organized records of the cost of acquisition, brokerage charges, and TDS details for all investments and transactions. Accurate documentation of these figures is crucial, particularly for calculating capital gains, claiming deductions, and avoiding mismatches that may delay refunds.
It is advisable to file your ITR only after TDS credits have been reflected in your account. Filing before these updates can result in errors or mismatched TDS, which may require additional clarifications and can delay refund processing.
Using reliable platforms like TaxBuddy can simplify the process significantly. TaxBuddy offers auto-filling features, error detection, and verification of pre-filled data, reducing the chances of mistakes.
Finally, always review the pre-filled data before submission. Check income details, TDS, deductions, and bank account information carefully to ensure accuracy. This final verification step helps prevent processing delays and ensures that your return is correctly filed.
Conclusion
Filing capital gains accurately is crucial to ensure compliance and timely refunds. Platforms like TaxBuddy simplify the process with auto-filling, AI-driven guidance, and expert support. For anyone looking for assistance in filing ITR for capital gains, it is highly recommended to download theTaxBuddy mobile appfor a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides flexibility with both self-filing and expert-assisted plans. Taxpayers can choose the self-filing option if they are comfortable preparing and submitting returns independently. The platform guides users with pre-filled data, intuitive forms, and step-by-step instructions. For those seeking expert guidance, TaxBuddy’s assisted plan connects taxpayers with experienced tax professionals who handle the filing process, verify data, and ensure accurate reporting, including capital gains and TDS credits.
Q2. How can I auto-fill capital gains in my ITR using TaxBuddy?
TaxBuddy simplifies capital gains reporting by automatically fetching data from the Annual Information Statement (AIS) and Form 26AS. Users can link their PAN, upload transaction statements for stocks, mutual funds, or property sales, and the platform pre-fills short-term capital gains (STCG) and long-term capital gains (LTCG) fields in the ITR. This reduces errors and saves time while ensuring compliance.
Q3. Where do I report short-term and long-term capital gains in the ITR?
STCG: Reported under Income from Capital Gains – Short-Term, typically on securities, equity, or property sold within 36 months (equity) or 24 months (property).
LTCG: Reported under Income from Capital Gains – Long-Term, applicable to assets held longer than the prescribed period. TaxBuddy automatically categorizes these gains based on the holding period and asset type for accurate ITR reporting.
Q4. What exemptions are available for capital gains under Sections 54, 54EC, and 54F?
Section 54: Exemption on LTCG from sale of a residential property if reinvested in another residential property within the specified period.
Section 54EC: Exemption on LTCG if invested in specified bonds (e.g., NHAI, REC) within six months of sale, subject to a limit of ₹50 lakh.
Section 54F: Exemption on LTCG from any asset (other than residential property) if proceeds are invested in a residential property and the taxpayer doesn’t own any other residential property. TaxBuddy highlights eligible exemptions and calculates the exempt portion automatically.
Q5. How are STCG and LTCG taxed under the old and new tax regimes?
Old Tax Regime: STCG on equities (listed on a recognized stock exchange with STT paid) is taxed at 15%, LTCG exceeding ₹1 lakh is taxed at 10%, other capital assets follow normal slab rates or 20% with indexation.
New Tax Regime: STCG and LTCG rates remain mostly the same, but taxpayers cannot claim most exemptions (except Section 54/54EC/54F). TaxBuddy compares tax implications under both regimes, helping users choose the optimal one.
Q6. What is the deadline for filing ITR with capital gains for FY 2024-25?
For individual taxpayers and non-audit cases, the extended ITR filing deadline is 15th September 2025. Businesses requiring audit must file by 31st October 2025. Filing after the deadline is possible as a belated return, but with applicable penalties and interest. TaxBuddy ensures users file within the correct timeline.
Q7. Will filing late affect my capital gains refund?
Yes. Filing late can delay the processing of refunds, as belated returns are processed after regular returns. Interest on delayed refunds may also be affected. Using TaxBuddy’s automated alerts and reminders helps taxpayers file on time to avoid delays.
Q8. How can TaxBuddy help avoid common mistakes in capital gains reporting?
TaxBuddy prevents errors by:
Auto-fetching STCG/LTCG from AIS/Form 26AS
Categorizing gains by asset type and holding period
Highlighting exemption eligibility
Ensuring correct TDS and advance tax credit utilization This reduces mismatches and audit notices from the Income Tax Department.
Q9. Is it mandatory to report all mutual fund redemptions in ITR?
Yes, all capital gains from mutual fund redemptions, whether STCG or LTCG, must be reported. TaxBuddy pre-fills mutual fund transactions using AIS and provides a summary for the taxpayer, making it easy to report correctly.
Q10. Can TDS deducted on capital gains be adjusted while filing ITR?
Yes. TDS credits reflected in Form 26AS or AIS can be adjusted against the total tax liability while filing ITR. TaxBuddy automatically reconciles TDS with taxable capital gains, ensuring accurate calculation of payable tax or refund.
Q11. What happens if there is a mismatch between my AIS and ITR?
If there is a mismatch, the Income Tax Department may issue a notice under Section 143(1)or 142(1). TaxBuddy cross-verifies AIS entries with uploaded documents and highlights discrepancies, allowing taxpayers to correct errors before submission, minimizing risk of notices.
Q12. Are deductions for capital gains available under the new tax regime?
Yes, exemptions under Sections 54, 54EC, and 54F are still available in the new tax regime. However, other deductions available under the old regime may not apply. TaxBuddy calculates eligible exemptions automatically, helping taxpayers reduce LTCG tax liability even under the new regime.
