Key Takeaways
- Use ITR-2 to declare mutual fund capital gains — ITR-1 (Sahaj) cannot be used for capital gains income.
- Download your capital gains statement from CAMS (camsonline.com) or KFintech — the two official RTAs in India.
- Enter LTCG (equity MF, held > 12 months) in Schedule 112A; STCG in Schedule CG of ITR-2.
- ITR filing deadline is July 31, 2026 for non-audit individuals — do not miss it.
- Even LTCG below the ₹1.25 lakh exemption must be disclosed — non-disclosure can trigger a tax notice.
Introduction
You redeemed some mutual fund units this year. Now what? Many investors are unsure whether their capital gains need to be declared, which ITR form to use, and how to get the capital gains statement. Missing this step can lead to a tax notice. This step-by-step guide makes the process simple — even for first-time ITR filers with investments.
How Do I Declare Mutual Fund Capital Gains in My Income Tax Return?
If you redeemed any mutual fund units in FY 2026-27 and made a gain, you must declare it in your Income Tax Return. Use ITR-2 — it is the correct form for individuals with capital gains income. If you also have business or professional income, use ITR-3. Do not use ITR-1 (Sahaj) if you have capital gains from equity or mutual fund redemptions — it is not eligible. File by July 31, 2026 to avoid a late-filing penalty.
Step-by-Step: Filing ITR for Mutual Fund Capital Gains
- Download your Capital Gains Statement: Go to the CAMS website (www.camsonline.com) or KFintech (www.kfintech.com). These are the two official RTAs (Registrar and Transfer Agents) for mutual funds in India. Log in with your PAN and download your consolidated capital gains statement for FY 2026-27.
- Identify LTCG and STCG separately: LTCG from equity funds (held > 12 months): taxable at 12.5% above ₹1.25 lakh annual exemption. STCG from equity funds (held < 12 months): taxable at 20%. Debt fund gains (post April 2023): taxable at slab rate.
- Choose ITR-2: Log in to incometax.gov.in, the official IT e-filing portal. Select ITR-2 under the correct assessment year (AY 2027-28 for FY 2026-27).
- Enter LTCG in Schedule 112A: All LTCG from equity mutual fund units must be entered scrip-by-scrip in Schedule 112A of ITR-2. CAMS/KFintech statements provide this data in the required format.
- Enter STCG in Schedule CG: Short-term capital gains from equity funds go under Schedule CG in the appropriate section.
- Check Section 87A rebate eligibility: Under the new tax regime, if your total income does not exceed ₹7 lakh (subject to current Budget updates — verify before filing), you may be eligible for a full tax rebate under Section 87A. Consult your CA for the latest threshold.
- Submit before July 31, 2026: The ITR deadline for individuals without audit requirement is July 31, 2026. Late filing attracts a penalty of ₹5,000 (or ₹1,000 if total income is below ₹5 lakh).
Common Mistake to Avoid
Many investors assume that reinvested dividends (IDCW) do not need to be declared. They do — they are taxable income in the year of receipt. Also, even if your LTCG is below the ₹1.25 lakh exemption limit, you must still disclose it in Schedule 112A. Disclosure is mandatory regardless of exemption. For complex portfolios, always consult a Chartered Accountant.
Disclaimer
Tax treatment depends on your individual tax status, holding period, and applicable tax regime. This blog does not constitute tax advice. Please consult a Chartered Accountant before making tax-related investment decisions.
This blog is for general financial education and awareness only. It does not constitute personalised investment, tax, legal, or insurance advice. Please consult qualified professionals for your specific situation.
Baid Inbest LLP is an AMFI-registered Mutual Fund Distributor. ARN: 86114. This content is for educational purposes only and does not constitute personalised investment advice.
Need help filing your ITR with mutual fund capital gains? Connect with Inbest's tax advisory team by calling +91 9903921999 or write to contactus@inbestnow.com.
