How to File ITR 2 Form with Capital Gains?

Learn filing ITR 2 Form efficiently, including capital gains details. Simplified the tax process for you.
3 mins read
17-April-2024

In the world of taxes, the form you use depends on where you live and how you earn. If you are not running a business, you will likely use ITR Form 2 – whether you are a family or an individual.

For those of you who earn from salaries, properties, investments, or foreign assets, ITR 2 is your go-to. ITR Form 2 is your friend for reporting capital gains.

In this blog, we teach you how to fill short-term capital gains and long-term capital gains in ITR-2. Read on to find out.

Steps to file ITR 2 with short-term and long-term capital gains

Individuals receiving capital gains through the sale of equity have to file IT returns every year. Here is a step-by-step guide for the same, specifically focusing on reporting capital gains in ITR-2:

  1. Log in to the official Income Tax department website using the necessary credentials
  2. Navigate to e-File > Income Tax Returns > File Income Tax Returns
  3. Select the assessment year, choose the status, and select the type of form. Select ‘Taxable income is more than the basic exemption limit’ as the reason for ITR filing
  4. Select ‘General’ and click on ‘Income Schedule’. Then, tap on ‘Schedule Capital Gains’ and choose the type of capital assets from the provided list
  5. Enter capital gains details. Differentiate between short-term and long-term capital gains. In the relevant section, provide details of the transactions causing capital gains. Include the sale value, purchase cost, and other associated expenses
  6. Once you have entered all the relevant details of your capital gains, the form will automatically calculate your tax liability based on the applicable tax rates for capital gains
  7. Confirm the necessary schedules, review Part B TTI, and then tap on ‘Preview Return’. Download the ITR and proceed with the declaration
  8. Provide specific details on the declaration tab and tap on ‘Proceed to Validation’. Verify the ITR filing electronically or by sending a signed ITR-V printout to the Income Tax Department office in Bangalore within 120 days of filing the ITR

Short-term capital gains in ITR-2

  • These gains come from selling assets you held for less than 36 months (or 24 months for property).
  • Go to the section for capital gains in ITR-2.
  • Write down details of each sale that made short-term gains: sale price, purchase cost, and any expenses allowed.

Long-term capital gains in ITR-2

  • These gains happen when you sell assets held for more than 36 months (or 24 months for property), except for some cases.
  • Look for the section in ITR-2 for long-term gains.
  • Put in details of each sale that resulted in long-term gains: selling price, cost with adjustments for inflation, and any allowed deductions.

Taxpayers looking to file ITR 2 with both short-term and long-term capital gains can follow these steps for a hassle-free experience. It is crucial to enter accurate data in each section and verify them before submitting the ITR form.

Conclusion

Filing your Income Tax Return using Form ITR-2 with capital gains requires careful attention to detail and accurate reporting of all relevant information. By following the steps outlined above, you can ensure compliance with tax regulations and fulfill your tax obligations effectively. If you're unsure about any aspect of filing your return, consider consulting with a tax professional for guidance.

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Frequently asked questions

What are the documents required to file ITR-2?

To file ITR-2, gather these documents:

  • Form 16 for salary
  • Form 16A for earned interest with TDS deductions
  • Form 26AS to verify TDS
  • Rent receipts for HRA
  • Capital gains statement
  • Bank documents for interest income
  • Proofs for tax-saving deductions (80C, 80G, 80D, 80GG).
How to report investment in unlisted equity shares in ITR?

Report investment in unlisted equity shares in ITR by providing details like the company's name, PAN, cost of acquisition, and sale proceeds under the relevant schedule or section.

What is the procedure for applying for the concessional route under Section 112A of the Income Tax Act?

To apply for the concessional route under Section 112A of the Income Tax Act, the following conditions apply:

  • Buy and sell equity shares with paid STT
  • Sell business trust units with STT
  • Assets must be long-term
  • Avoid Chapter VI A deductions
  • Don't claim rebate under Section 87A.

How has ITR-2 changed as compared to previous years?

Changes in ITR-2 may vary every year. Additionally, you can opt for the new tax regime under section 115BAC of the I-T Act. Remember that this option for selecting a new regime will be available only until the due date of filing the return.

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