Capital Gains Tax in India: ITR Filing Guide for 2024

1. What are Capital Gains?

Capital gains refer to profits earned from selling:

• Real estate (house, land, commercial property)
• Stocks & bonds (equity, debentures)
• Mutual funds (equity, debt, hybrid)
• Gold & other assets (jewelry, digital gold)

Key Terms:

• Capital Asset: Any property held by taxpayer
• Holding Period: Time between purchase and sale
• Cost of Acquisition: Original purchase price

2. Types of Capital Gains

A. Short-Term Capital Gains (STCG)

Asset Type	Holding Period
Equity shares, equity mutual funds	<12 months
Debt mutual funds, real estate	<24 months

B. Long-Term Capital Gains (LTCG)

Asset Type	Holding Period
Equity shares, equity mutual funds	≥12 months
Debt mutual funds, real estate	≥24 months

3. Tax Rates on Capital Gains (2024)

A. Short-Term Capital Gains Tax

Asset	Tax Rate
Equity shares/MFs (STT paid)	15%
Debt mutual funds	As per income slab
Real estate	As per income slab

B. Long-Term Capital Gains Tax

Asset	Tax Rate
Equity shares/MFs (STT paid)	10% (above ₹1 lakh exemption)
Debt mutual funds	20% with indexation
Real estate	20% with indexation

Indexation Benefit: Adjusts purchase price for inflation (reduces taxable gains).

4. Exemptions & Deductions

A. Section 54: House Property Reinvestment

• Exemption: Invest LTCG from property sale in:
  • Buying another house (within 1 year before/2 years after the sale)
  • Constructing a house (within 3 years)
• Limit: Full exemption if reinvested amount ≥ capital gains

B. Section 54EC: Bonds Reinvestment

• Exemption: Invest in REC/NHAI bonds within 6 months of sale
• Limit: ₹50 lakh per financial year

C. Section 10(38): Equity LTCG Exemption

• ₹1 lakh per year exempt (beyond this, 10% tax applies)

5. Which ITR Form to Use?

ITR Form	Applicability
ITR-2	Capital gains from stocks, property (not business income)
ITR-3	If trading stocks as business (frequent transactions)

Note:

• Derivatives trading? Must file ITR-4 (if presumptive taxation applies)

6. Documents Required

• Sale Deed/Purchase Agreement (for property)
• Brokerage Statements (for stocks/MFs)
• Capital Gains Account Statement (if reinvestment done)
• Form 16A/26AS (for TDS on property sale)

7. Step-by-Step ITR Filing

Step 1: Calculate Capital Gains

• STCG: Sale price – (Purchase price + expenses)
• LTCG: Sale price – (Indexed cost + expenses)

Indexation Formula:

Indexed Cost = (Purchase Price × CII of Sale Year) / CII of Purchase Year

Step 2: Report in ITR

• Schedule CG: Fill details of asset sold
• Schedule 112A/111A: For equity LTCG/STCG

Step 3: Claim Exemptions

• Section 54/54EC: Declare reinvestment details

Step 4: Pay Tax (If Due)

• Use Challan 280 for advance tax

Step 5: E-Verify

• Via Aadhaar OTP or EVC

8. Common Mistakes

❌ Not Reporting Small Gains (Even ₹1 profit is taxable)
❌ Missing Indexation Benefit (Loses 20% tax advantage)
❌ Wrongly Claiming 54EC Exemption (Only for property gains)
❌ Ignoring TDS on Property Sale (1% TDS if sale value > ₹50 lakh)

External Sources

• Income Tax Dept – Capital Gains
• SEBI Guidelines

9. FAQs