How to Report Stock Market Capital Gains in Your ITR (AY 2026-27)
STCG, LTCG, the right ITR form, and the 31 July 2026 deadline explained
To report stock market capital gains in your ITR for AY 2026-27, use ITR-2 (or ITR-3 if you also trade F&O). Short-term gains on listed shares are taxed at 20%, and long-term gains above ₹1.25 lakh are taxed at 12.5%. Enter each sale in Schedule CG and Schedule 112A, pay any self-assessment tax, and e-verify. The deadline for most investors is 31 July 2026.
Every investor who sold shares or equity mutual funds last year must learn how to report capital gains in ITR. The tax rules changed in 2024, and the filing forms changed again for AY 2026-27. Getting this wrong can cost you a notice, a penalty, or a lost refund. This guide walks salaried investors and traders through the exact steps, rates, and forms for FY 2025-26.
The profit you book when you sell an asset is a capital gain. For stocks and equity funds, the tax you pay depends on one thing: how long you held them.
Short-term vs long-term: the 12-month rule
For listed shares and equity mutual funds, the cut-off is 12 months.
- Held 12 months or less → Short-Term Capital Gain (STCG) under Section 111A.
- Held more than 12 months → Long-Term Capital Gain (LTCG) under Section 112A.
This only applies when Securities Transaction Tax (STT) is paid, which it always is on normal delivery trades. Note that a broker charging STT does not mean your tax is done. STT is a separate levy. You still owe income tax on the gain.
The tax rates you must know for FY 2025-26
Budget 2024 raised these rates for all sales made on or after 23 July 2024. Since the whole of FY 2025-26 falls after that date, these rates apply to every trade you file this year.
Listed shares / equity funds, held ≤ 12 months: taxed at a flat 20% under Section 111A.
Held > 12 months: first ₹1.25 lakh per year is tax-free, and the balance is taxed at 12.5% under Section 112A. No indexation is allowed.
Units bought on or after 1 April 2023 are always taxed at your slab rate, with no long-term benefit.
One trap catches many people. The Section 87A rebate that makes income up to ₹12 lakh tax-free under the new regime does not apply to these special-rate gains. So even a small STCG can create a tax bill.
What is the tax rate on short-term capital gains from listed shares in FY 2025-26?
Which ITR form should an investor file?
Picking the wrong form is the most common filing error. Match your situation to the right one.
- ITR-1 (Sahaj): allowed only if your sole capital gain is LTCG under Section 112A up to ₹1.25 lakh, with no loss to carry forward. This is new for AY 2026-27.
- ITR-2: the form for most investors. Use it for any STCG, any LTCG above the exemption, capital losses, or more than one house property, as long as you have no business income.
- ITR-3: for anyone with business income. This includes F&O and intraday traders, whose trading is treated as business income, not capital gains.
In short: a salaried person who invests in stocks files ITR-2. Someone who also trades F&O files ITR-3.
How to report your capital gains: step by step
The process on the income tax portal is straightforward once your paperwork is ready.
- Download your statements. Get the capital gains statement from your broker or fund house. Then open your Annual Information Statement (AIS) on the portal. The tax department already has your trade data, so the two must match.
- Log in and pick the form. Sign in at the income tax e-filing portal with your PAN, and select ITR-2 for Assessment Year 2026-27.
- Fill Schedule CG. Enter short-term and long-term gains separately. For LTCG on equity, Schedule 112A needs scrip-wise detail: each stock, buy cost, sale value, and quantity.
- Apply grandfathering. For shares bought before 1 February 2018, your cost is the higher of the actual cost or the lower of the fair value on 31 January 2018 and the sale price. This protects older gains.
- Set off losses. A short-term loss can offset both short and long-term gains. A long-term loss offsets only long-term gains.
- Pay and verify. Pay any self-assessment tax due, submit the return, and e-verify with your Aadhaar OTP within 30 days.
Read the full ITR filing guide if you also need help with salary and deduction schedules.
How much long-term capital gain on equity is tax-free each financial year?
The 31 July deadline and what happens if you miss it
For salaried investors filing ITR-2, the due date is 31 July 2026. If you also run a business or trade F&O and need ITR-3 without an audit, you get until 31 August 2026.
Missing the date is expensive. A late fee under Section 234F is ₹5,000, or ₹1,000 if your total income is below ₹5 lakh. You also pay 1% interest a month on unpaid tax. Worst of all, you lose the right to carry forward this year's capital losses to offset future gains. A belated return is still possible up to 31 December 2026, but the carry-forward benefit is already gone.
Mistakes investors make, and what CAs do instead
- Skipping small gains. Even if the amount looks tiny, the AIS reports it. A mismatch invites a notice.
- Using ITR-1 with STCG. Any short-term gain rules out ITR-1. Use ITR-2.
- Forgetting the ₹1.25 lakh shield. Many investors pay tax on the full LTCG and miss the exemption.
- Ignoring losses. A veteran files on time precisely to lock in loss carry-forward for eight years. Pairing this with tax-loss harvesting before year-end can cut the bill further.
- Not reconciling the AIS. Always match your broker statement to the AIS before you submit.
For the wider rate picture, see the LTCG tax explainer and how the new vs old tax regime affects your slab income. File early, reconcile carefully, and the capital gains schedule stops being scary.
Sources: Income Tax Department (incometax.gov.in), Income Tax India (incometaxindia.gov.in) Schedule 112A instructions, and the Finance Act 2024 provisions on Sections 111A and 112A. Figures current as of July 2026.