Capital Gains Tax Rules Changed: What ITR-2 & ITR-3 Filers Must Know
If you’re filing ITR-2 or ITR-3, the capital gains reporting rules have been updated for AY 2025–26. Whether you sold shares, mutual funds, or property last year — this affects you. The CBDT has revised Schedule CG, introduced new validation checks, and mandated segregated disclosures. Here’s a clear breakdown to help you stay compliant.
What Changed in Capital Gains Tax Reporting?
The Income-tax Return Forms for AY 2025–26 (i.e., FY 2024–25) were notified by CBDT via Notification No. 40/2025 dated 29.04.2025. Key changes in capital gains reporting include:
🧾 Major Updates in Schedule CG
- Segregated reporting of sale proceeds from listed shares, unlisted shares, property, and mutual funds.
- New fields to distinguish resident vs. non-resident taxation, especially for NRIs using ITR-2.
- Quarter-wise disclosure of long-term vs. short-term capital gains now required.
- Separate sections for:
- Section 112A (LTCG on equity)
- Section 111A (STCG on equity)
- Unlisted shares / ESOPs
- Immovable property sale with TDS u/s 194-IA
🧮 Updated Computation Flow
- Mandatory fields for FMV on 31.01.2018 for grandfathering benefit under Section 112A.
- Auto-adjustments for exempt capital gains under Section 10(38), 54EC, 54F etc.
- Separate tab for indexation base year selection (2001 or 2023, as per CBDT clarification).
Which ITR Form Should You Use?
| Criteria | ITR-2 | ITR-3 |
|---|---|---|
| Capital gains from shares/property | ✅ Applicable | ✅ Applicable |
| Business income | ❌ Not allowed | ✅ Mandatory |
| Income from salary, house property | ✅ | ✅ |
| Foreign income or assets | ✅ | ✅ |
Expert Tip: Don’t Upload Without Taxpayer-Level CG Summary
Many taxpayers miss the fact that AIS/TIS data often doesn’t match broker or demat reports. Always reconcile capital gains with your brokerage statements and Form 26AS before filing.
“Mismatch in capital gains is now one of the top reasons for ITR mismatch notices. Even minor errors in scrip-level reporting can lead to scrutiny,” says CA Bhavana Iyer, tax consultant.
Compliance Checklist for Capital Gains Reporting (AY 2025–26)
- Download Form 26AS and AIS from https://incometax.gov.in
- Cross-verify each sale transaction from broker/demat statement
- Ensure property sale TDS u/s 194-IA is correctly reflected
- Report exempt LTCG under correct section (10(38), 54F, etc.)
- Check indexation benefit under correct base year
- Upload ITR using updated utility or EVC/DSC after final validation
Legal Backing
- CBDT Notification No. 40/2025: Amendments to Rule 12 of the Income-tax Rules, 1962
- Finance Act, 2024: Changes in taxation of debt mutual funds, REITs, and market-linked debentures
- Circular No. 6/2025 dated 27.05.2025: ITR due date extended to 15 September 2025 for non-audit cases
FAQ: Capital Gains in ITR-2 and ITR-3
Q1. I have only one property sale. Should I use ITR-2 or ITR-3?
If you have no business income, ITR-2 is sufficient.
Q2. Is grandfathering still available for shares bought before Jan 2018?
Yes, FMV as on 31.01.2018 can be used under Section 112A.
Q3. Do I need to upload broker-wise capital gain reports?
Not mandatory, but advisable to keep for records and match with AIS.
Final Thoughts
The capital gains tax rules have become stricter in form but clearer in intent — better matching with AIS, cleaner disclosures, and fewer errors. For investors, NRIs, and property sellers, accurate reporting under ITR-2 and ITR-3 is crucial this year.
Don’t file in a hurry. Let Efiletax handle your ITR filing with expert capital gains reconciliation and secure uploads.
👉 Ready to file your ITR-2 or ITR-3? Get started with Efiletax now
Summary
Capital gains reporting rules changed for ITR-2 and ITR-3 in AY 2025–26. New disclosure formats, validation checks, and indexation rules apply. Use updated Schedule CG, reconcile with AIS/Form 26AS, and avoid mismatches. File confidently with expert help from Efiletax.