As FILING OF income tax returns for AY 2026-27 begins, taxpayers must disclose capital gains accrued or received during different periods of the year. Filling this correctly is essential to avoid interest penalties under Section 234C.
Salaried taxpayers can file ITR-1 where the capital gains reported are within the prescribed threshold of Rs 1.25 lakh. In all other cases involving capital gains, such as short-term capital gains (STCG) on listed shares, long term capital gains (LTCG) in excess of Rs 1.25 lakh, sale of property, foreign assets, the taxpayer will have to file ITR-2. Taxpayers having business or professional income along with capital gains need to file ITR-3.
The quarterly break-up
In ITR-2 and ITR-3, taxpayers must not ignore Table F which is about accrual/receipt of capital gains. It captures the timing of capital gains during the financial year and is mandatory for successful filing of the ITR. The information is used for interest computation relating to advance tax liability.
Advance tax is payable in four quarterly installments based on estimated annual income. However, since capital gains cannot be accurately predicted, the government allows taxpayers to pay advance tax on such gains only after they are actually realised. Neeraj Agarwala, senior partner, Nangia & Company, says an incorrect quarterly allocation may result in an inaccurate computation of interest under Sections 234B and 234C. “Taxpayers should carefully determine the date of transfer and allocate gains to the relevant reporting period,” he says.
How to file capital gains
To simplify tax filing, taxpayers can obtain a consolidated capital gains statement through registrar portals like CAMS Online or KFintech, or by downloading the Consolidated Account Statement on platforms such as NSDL using their PAN.
In Schedule CG (Capital Gains) of their return, taxpayers should put in transaction specific details such as acquisition dates, purchase costs, and sale consideration segregated by asset type. Sandeep Sehgal, partner, Tax, AKM Global, a tax and consulting firm, says where LTCG exceed the specified limit then taxpayers must use Schedule CG-112A in ITR-2 or ITR-3.
“This schedule requires scrip-wise (share-by-share) details for assets acquired before February 1, 2018, to accurately calculate grandfathering benefits,” he adds.
For STCG, reporting is done under Section 111A of Schedule CG. STCG requires only consolidated figures, including the gross sale consideration, cost of acquisition, and transfer expenses (excluding STT). These net gains are taxed at a flat rate of 20%. To ensure a seamless submission, always cross-verify your manual entries with the pre-filled data in your Annual Information Statement and capital gain statement.
Property transactions
For property transactions, taxpayers must compute capital gains by deducting the indexed or non-indexed cost of acquisition, cost of improvement and eligible transfer expenses from the sale consideration, as applicable under the amended provisions.
The income tax return forms i.e., ITR-2 and ITR-3, require taxpayers to furnish detailed information relating to the acquisition and transfer of the property, including the dates of purchase and sale, cost of acquisition, and cost of improvement.
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