No need to report capital gains by transfer date in new income-tax return forms; here's why

In a change from last year, the Central Board of Direct Taxes (CBDT) has removed the provision for reporting of capital gains by transfer date in "Schedule Capital Gains" of the new Income-tax Return (ITR) forms — ITR-2, ITR-3, ITR-5, ITR-6, and ITR-7 — for AY 2026-27 (FY 2025-26). These forms were notified by the CBDT recently. This article explains the reason for this change.

In the previous tax filing season (AY 2025-26), taxpayers had the option to report capital gains based on whether they were realised before or after July 23, 2024. This provision was provided in the ITR forms due to the capital gains tax rules changes introduced in the Finance (No.2) Act 2024.

The Finance (No.2) Act 2024 introduced several changes in capital gains tax rates and holding periods. Effective from July 23, 2024, the following were some of the important rules introduced by this Act:

• Only two holding periods, 1 year and 2 years, for computing capital gains.

• Indexation benefit removed

• Long-term capital gains tax rate on various capital assets reduced from 20% to 12.5% for all assets.

• LTCG on equity shares and equity mutual funds raised from 10% to 12.5%.

• STCG on equity shares and equity mutual funds hiked from 15% to 20%

As the above changes became effective from July 23, 2024, ITR forms in the previous year required a separate disclosure of capital gains arising before or after this date. More so because the rates were different based on the timing of the sale of an asset.

For AY 2026-27, separate disclosure is not required, as there was no change in capital gains tax rules in the previous financial year. As a result, the Income-tax Department has removed the dual reporting requirement in the Schedule Capital Gains of the new ITR forms.

"In the new ITR forms, dual reporting has been removed, as the rate change was relevant only for the transitional period in the previous year, 2024–25. Since no such mid-year change exists for the previous year relevant to AY 2026–27, the requirement to bifurcate capital gains based on transfer date is no longer necessary, thereby simplifying the reporting framework," experts at Taxmann said in an analysis of over 20 changes in the ITR forms for AY 2026-27.

Under Schedule Capital Gains, taxpayers are required to provide details for both short-term and long-term capital gains from capital assets like land and property (or both), equity shares and equity mutual funds or units of business trusts on which STT is paid.