Introduction

Filing your Income Tax Return (ITR) correctly is crucial, especially when reporting capital gains. If you have earnings from the sale of stocks, mutual funds, or real estate, you must report them in the ITR 2 form. Whether you have long-term capital gains (LTCG) or short-term capital gains (STCG), understanding how to fill ITR 2 correctly can save you from unnecessary tax complications.

In this guide, we’ll break down how to fill long-term capital gains in ITR 2, along with the process for short-term capital gains, ensuring a smooth and hassle-free tax filing experience

What is ITR 2, and Who Should File It?

ITR 2 is an Income Tax Return form meant for individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession but have income from the following sources:

• Salary or Pension

• House Property (including multiple properties)

• Capital Gains (from stocks, mutual funds, real estate, etc.)

• Other Sources (such as interest income, dividends, lottery winnings, etc.)

• Foreign Income or Assets

Additionally, you must file ITR 2 if:

• Your total income exceeds ₹50 lakh, making you ineligible for ITR 1 (Sahaj).

• You have capital gains during the financial year.

• You own foreign assets or have foreign income.

• You are a director in a company or hold unlisted equity shares.

• You have agricultural income exceeding ₹5,000.

If any of these apply to you, you must use ITR 2 for your tax filing.

Step-by-Step Guide to File ITR 2 Form with Capital Gains

How to File ITR 2 Form with Capital Gains in 2025

Filing ITR 2 with capital gains involves a few critical steps. Follow this step-by-step guide to ensure accuracy and compliance:

Step 1: Gather Required Documents

Before you begin, collect the necessary documents:

• PAN Card and Aadhaar Card

• Form 16 (if applicable, for salary income)

• Form 26AS (to verify TDS deducted)

• Capital Gains Statements from your broker or mutual fund house

• Purchase and Sale Details of capital assets

• Bank Account Details

Step 2: Log in to the Income Tax e-Filing Portal

1. Go to https://www.incometax.gov.in.

2. Log in using your PAN and password.

3. Select ‘File Income Tax Return’.

4. Choose the assessment year 2024-25.

5. Select ITR 2 as the applicable form.

Step 3: Enter Personal and Income Details

1. Fill in personal details like PAN, Aadhaar, name, and contact details.

2. Enter your income details from salary, house property, and other sources.

3. Navigate to the Capital Gains section.

Step 4: How to Fill Capital Gains in ITR 2

1. Filing Long-Term Capital Gains (LTCG)

If you have LTCG (gains from assets held for more than a year for equities or two years for real estate):

• Select ‘Schedule CG (Capital Gains)’.

• Under ‘Long-Term Capital Gains’, enter:

  • Date of purchase and sale

  • Purchase cost and sale value

  • Indexed cost of acquisition (if applicable)

  • Exemptions under Section 54, 54EC, 54F (if applicable)

• If LTCG from listed shares/mutual funds exceeds ₹1 lakh, tax at 10% applies.

• For listed equity shares, mutual funds, etc., LTCG was tax-free until FY2017-18, but now gains above ₹1 lakh are subject to a 10% tax rate.

• While filing ITR 2, individuals must provide scrip-wise details for LTCG, including ISIN, purchase price, selling price, and transaction dates in ‘Schedule 112A’.

• After filling in the details, click ‘Add’ to save.

2. Filing Short-Term Capital Gains (STCG)

If you have STCG (gains from assets held for less than a year for equities or less than two years for real estate):

• Select ‘Short-Term Capital Gains’.

• Enter details:

  • Date of purchase and sale

  • Purchase cost and sale value

  • Exemptions (if applicable)

• STCG from listed equity shares/mutual funds is taxed at 15% under Section 111A.

• If your total taxable income excluding STCG is below the minimum exemption limit of ₹2.5 lakh, the shortfall is adjusted against STCG, and only the remaining STCG is taxed at 15% plus a 4% cess.

• To report STCG, click ‘Add details’, and provide the consolidated amount obtained from the sale of short-term assets, along with the Cost of Acquisition (COA) for the relevant financial year.

Step 5: Claim Deductions and Verify Taxes Paid

• Check deductions under Section 80C, 80D, and others.

• Verify tax already paid (TDS and advance tax) under Form 26AS.

• If tax is due, pay using Challan 280 and update the details.

Step 6: Validate and Submit ITR

• Click on ‘Preview & Validate’ to check for errors.

• Once validated, click ‘Submit’.

• E-verify using Aadhaar OTP, net banking, or a physically signed ITR-V form.

Important Deadlines for ITR 2 Filing

• 31st July 2025 – Due date for individuals (without audit).

• 31st October 2025 – For those requiring an audit.

• 31st December 2025 – Last date to file a belated return.

Important Points to Remember

• LTCG on equity above ₹1 lakh is taxable at 10%.

• STCG from listed equity is taxed at 15%.

• Ensure you claim exemptions correctly to reduce tax liability.

• E-verification is mandatory; failure to verify invalidates the filing.

Common Mistakes to Avoid

• Not reporting all capital gains.

• Incorrect cost basis or indexation calculation.

• Missing out on tax-saving exemptions.

• Failing to e-verify after submission.

Conclusion

Filing ITR 2 Form with capital gains may seem complicated, but with the right approach, you can optimize your taxes and avoid penalties. Follow this guide to ensure accurate reporting and smooth filing in 2025. If you need expert assistance, Motilal Oswal’s tax experts are here to help!

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Related reads: What is IT return? How to file it online | What are the charges for filing IT returns?

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