Which ITR Form Should I Use for Capital Gains?
The correct ITR form depends on the type and amount of capital gains and the taxpayer's other income and circumstances. For AY 2026–27, ITR-1 has specific restrictions relating to short-term capital gains and section 112A long-term capital gains.
Quick Answer
A taxpayer with short-term capital gains generally cannot use ITR-1. Certain taxpayers with section 112A LTCG up to ₹1.25 lakh may still qualify for ITR-1 if all other conditions are satisfied; otherwise another ITR may be required.
When ITR-1 Is Not Available
The Income Tax Department's AY 2026–27 guidance states that ITR-1 cannot be used by a person who has short-term capital gain, among other exclusions.
Limited Section 112A LTCG Eligibility
The same guidance allows certain eligible taxpayers to have section 112A capital-gain income up to ₹1.25 lakh while using ITR-1, subject to the other eligibility conditions.
What About ITR-2?
ITR-2 is designed for individuals and HUFs who have income requiring reporting beyond the simplified ITR-1 conditions, including capital-gain situations that make ITR-1 unavailable.
What About Business or Professional Income?
If the taxpayer also has income from business or profession, the appropriate ITR may be ITR-3 or another applicable form depending on the circumstances.
Capital Gains and ITR-4
Current AY 2026–27 guidance also restricts ITR-4 for taxpayers with short-term capital gains and certain other capital-gain circumstances.
Important
Choosing the ITR should be based on the complete income profile, not capital gains alone.
Frequently Asked Questions
Can I file ITR-1 if I sold shares at a profit?
If the sale creates short-term capital gain, current AY 2026–27 guidance says ITR-1 cannot be used.
Can ITR-1 include LTCG on equity shares?
Certain eligible taxpayers can have section 112A LTCG up to ₹1.25 lakh and still qualify for ITR-1, subject to all other conditions.
Do capital losses affect ITR eligibility?
Yes. Current AY 2026–27 guidance lists brought-forward or carry-forward losses among the conditions that can make ITR-1 or ITR-4 unavailable.
Related EZTax Resources
- What Is AIS (Annual Information Statement) in Income Tax?
- AIS vs Form 26AS: What Is the Difference?
- Does AIS Show Capital Gains?
- AIS Reconciliation and AI-Powered Income Tax Filing with EZTax
- Capital Gains Income Tax Guide
Official Sources
For current capital-gains and ITR guidance, refer to the Income Tax Department resources for the relevant assessment year.
