ITR filing 2026: 9 deductions to cut capital gains tax for salaried and individual taxpayers

Salaried taxpayers will be able to file their returns after receiving Form 16 by June 15, 2026. In the lead-up to ITR filing, we are tracking and explaining all key details relevant to ITR filing in 2026. Today's article lists nine deductions that salaried persons and other individual taxpayers can claim to cut their capital gains tax while filing returns for AY 2026-27 by July 31, 2026.

Please note that strict terms and conditions apply to these deductions. Therefore, they cannot be claimed by all salaried or individual taxpayers.

Tax deductions allowed against capital gains

1)Deduction under Section 48 (i): This deduction is allowed against the expenditure incurred wholly and exclusively in connection with the transfer of capital assets.

2)Deduction under Section 48(ii): This is allowed against the cost of acquisition of a long-term capital asset and of any improvement to it, including the indexed cost of acquisition and the indexed cost of improvement.

According to the Income-tax Department, the cost of acquisition/improvement cannot include deductions claimed on the amount of interest under Section 24(b) or Chapter VIA. However, there are certain exemptions that you can understand better by consulting a tax expert.

Further, the indexation benefit, including the indexed cost of acquisition and the indexed cost of improvement, is available only on long-term capital gain (LTCG) arising from the sale/transfer of a capital asset before July 23, 24.

3)Deduction under Section 54: This is allowed when LTCG from the sale of a residential house and land is reinvested for purchasing or constructing another residential house. However, there are certain conditions and limits to this rule.

4)Deduction under Section 54B: This is allowed when capital gains from the transfer of land used for agricultural purposes, by an individual or his parents or a HUF, are reinvested in other land for agricultural purposes. This is also subject to certain conditions and limits)

5)Deduction under Section 54D: This is allowed when capital gains on compulsory acquisition of land are used for purchasing or constructing other land.

6)Deduction under Section 54EC: This is allowed when LTCG from the transfer of land or building is reinvested in bonds of NHAI, REC, or any other notified bond.

7)Deduction under Section 54EE: This is allowed when LTCG is reinvested in long-term specified assets, being units of a fund notified by the Central government to finance start-ups.

8)Deduction under Section 54F: This deduction is allowed when the net consideration on transfer of a long-term capital asset, other than a residential house, is reinvested in a residential house. However, this is subject to certain conditions and limits.

9)Deduction under Section 54GB: This allows tax exemption against LTCG if an assessee reinvests the net proceeds from the sale of a residential property, including a house or a plot of land, into an eligible company or an eligible startup allowed under this section. Such an investment should be made before the due date of ITR filing and the company/startup must use the invested amount for buying specified new assets within 1 year from the date of subscription.