How to File ITR-2 for Capital Gains from Stocks: Step-by-Step (FY 2026-27)

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In short: If you sold any stocks during FY 2026-27, you need to file ITR-2 (or ITR-3 if you also have F&O income). The hard part is Schedule CG and Schedule 112A — they ask for scrip-wise gain details that brokers like Zerodha, Dhan, and Groww now pre-format in their tax P&L reports. This guide walks through the full ITR-2 filing process: downloading broker tax P&L, importing into the IT portal, filling Schedule CG correctly, claiming the ₹1.25 lakh LTCG exemption, and the seven mistakes that trigger notices. End-to-end time: 60-90 minutes for a typical investor with under 100 trades.

Which ITR form do you need?

If you filed ITR-1 last year but sold stocks this year, you must switch to ITR-2. The IT portal will flag a defective return if you try to claim capital gains in ITR-1.

What you need before filing

1. Form 26AS — your tax credit statement showing TDS deducted, taxes paid, and high-value transactions reported. Download from the IT portal under “View Form 26AS.”
2. AIS (Annual Information Statement) — more detailed than 26AS, shows your dividend receipts, mutual fund redemptions, stock sales reported by brokers. Download from the IT portal under “Services → AIS.”
3. TIS (Taxpayer Information Summary) — a summarised version of AIS. Useful for cross-checking.
4. Broker tax P&L statement — every major broker now provides a “Capital Gains Statement” or “Tax P&L” download for the financial year. This is your single most important document.
5. Bank statements — to reconcile dividend receipts and identify any missed transactions.
6. Form 16 (if salaried) — provided by your employer.
7. Dividend statements — usually consolidated in your broker’s tax P&L.
8. Bank interest certificates — for savings and fixed deposits.

How to download tax P&L from major brokers

Zerodha (Console): Console → Reports → Tax P&L → Select financial year → Download PDF and Excel. The Excel format is pre-aligned to ITR Schedule 112A.

Dhan: Profile → Reports → Tax P&L → Select FY. Dhan provides PDF and Excel exports compatible with most tax software.

Groww: Profile → Reports → Capital Gain Statement → Select FY → Download.

Upstox: Reports → Tax P&L → FY selection.

Angel One: Reports → Tax P&L Statement (under Profit and Loss).

If you held an account during the year that you have since closed, request the tax P&L from the old broker before they archive your access. Some brokers charge ₹100-500 to retrieve old reports after account closure.

Step-by-step: filing ITR-2 on the income tax portal

Step 1: Log in to incometax.gov.in

Use your PAN as user ID. If you have not registered, use the “Register” option with PAN and Aadhaar OTP verification.

Step 2: Start filing for AY 2027-28

Navigate to e-File → Income Tax Return → File Income Tax Return. Select Assessment Year 2027-28 (for income earned in FY 2026-27).

Step 3: Select ITR-2

Choose Mode of Filing: Online. Select ITR-2 from the dropdown. The system asks if you want to continue with new or old regime — choose based on your tax planning.

Step 4: Verify pre-filled personal details

Name, PAN, address, bank account details are pre-filled from your profile. Verify especially the bank account where you want refund credited — wrong details cause refund failures.

Step 5: Fill Schedule Salary (if applicable)

Section 17(1) salary, allowances, perquisites — most fields are pre-filled from Form 16 uploaded by your employer. Review and confirm.

Step 6: Fill Schedule HP (if you own rental property)

Skip if not applicable.

Step 7: Fill Schedule CG — the capital gains section

This is where stock investors spend most of their time. The schedule has multiple sub-sections:

For STCG on listed equity (Section 111A):

• Enter aggregate sale consideration from your broker tax P&L
• Enter aggregate cost of acquisition
• Enter aggregate expenses on transfer (brokerage)
• The system computes STCG automatically

For LTCG on listed equity (Section 112A) — the detailed schedule:

• Click “Add Details” to open Schedule 112A
• For each long-term sale: enter ISIN, name of share, number of units, sale price per unit, cost of acquisition per unit, FMV on 31 Jan 2018 (if bought before that date — grandfathering)
• The system calculates LTCG per trade and aggregates
• Most tax software auto-fills this from your broker’s Excel — saving you from entering 50+ rows manually

For STCG / LTCG on debt funds, real estate, gold, etc.: Fill corresponding sections under Schedule CG. Tax rates differ by asset class.

Step 8: Fill Schedule OS — Income from Other Sources

Dividend income from stocks goes here. The pre-filled data from AIS includes most dividends — verify against your bank statements for any missed entries. Interest from savings accounts and FDs also goes in this schedule.

Step 9: Fill Schedule VI-A — Chapter VI-A deductions

Section 80C (PPF, ELSS, EPF, life insurance premium), 80D (health insurance), 80CCD(1B) (NPS), 80TTA (savings interest) — claim what applies. The standard ₹50,000 salary deduction is auto-applied.

Step 10: Schedule CYLA — Loss adjustment within current year

If you have any losses in the current year that need to offset gains in other heads, this is where you handle that. Common cases:

• STCL offsetting STCG and LTCG
• LTCL offsetting LTCG (only)
• Short-term capital loss from debt funds offsetting equity STCG

Step 11: Schedule CFL — Carried Forward Losses

Any unutilised losses from earlier years that you carried forward (8-year window for capital losses) get adjusted here. The system shows your loss history from prior ITRs.

Step 12: Schedule SI — Special Income (tax at special rates)

Auto-populated based on STCG and LTCG entered earlier. Just verify the numbers match.

Step 13: Review tax computation

The system computes:

• Slab-rate tax on salary + other income
• 20 percent on STCG (Section 111A)
• 12.5 percent on LTCG above ₹1.25 lakh exemption (Section 112A)
• Less: Rebate u/s 87A (if total income ≤ ₹7 lakh in new regime, ₹5 lakh in old regime)
• Plus: Health and education cess at 4 percent on total tax
• Less: TDS already deducted, Advance Tax paid
• Net: Tax payable or refundable

Step 14: Pay any balance tax

If your total tax liability exceeds TDS already deducted, pay the balance via the integrated payment gateway before submitting. Use Challan 280 with the assessment year selected as 2027-28.

Step 15: Verify and submit

Review the return one final time. Submit. The system gives you an ITR-V acknowledgement.

Step 16: E-verify within 30 days

An unverified ITR is treated as not filed. Three quick e-verification methods:

• Aadhaar OTP (fastest, 30 seconds)
• Bank account OTP (if pre-validated)
• Net banking login (most banks supported)

If you cannot e-verify, you can sign a physical ITR-V and post it to CPC Bengaluru within 30 days — but the postal route is slow and prone to errors.

How to use tax software (faster route)

For 50+ trades, filing manually on the IT portal is tedious. Tax filing software automates most of it:

ClearTax (cleartax.in) — ₹500-1,500 for AY 2027-28 depending on plan. Direct broker integration with Zerodha, Groww, ICICI Direct, HDFC Securities. Upload your broker tax P&L Excel and it auto-fills Schedule 112A.

Tax2Win — Free for simple returns. ₹500-1,200 for capital gains + multiple income heads. CA assistance available at higher tiers.

Quicko (quicko.com) — Best for active traders. Native integration with Zerodha. Strong on F&O turnover calculation. Free for basic, ₹500-1,500 for premium plans.

myITreturn — Established player. Slightly higher pricing (₹800-2,000) but includes scrutiny defence in some plans.

For a typical investor with under 200 trades, ClearTax or Quicko at ₹500-1,000 saves ~3-5 hours of manual data entry and reduces error risk.

Seven mistakes that trigger income tax notices

1. Mismatch between AIS and ITR data. The IT department compares your filed ITR against AIS (which captures all broker-reported transactions). If you understated a stock sale by even ₹500, the system flags it. Always reconcile your broker tax P&L with AIS before filing.

2. Missing dividend income. Dividends from foreign stocks via INDmoney/Vested are reported in AIS but easy to miss. Pre-2020, dividends were tax-free; post-2020 they are taxable at slab rate. Many investors forget to add them.

3. Wrong cost basis for grandfathered shares. If you sold shares bought before 31 Jan 2018, you must use the higher of (actual cost) or (FMV on 31 Jan 2018, capped at sale price). Many manual filings use actual cost, overstating gains.

4. Forgetting bonus and split adjustments. When a company issues bonus shares or splits stock, your cost basis adjusts proportionally. Brokers’ tax P&L typically handles this — but if you transferred shares between brokers, the original cost basis can get lost. Cross-check.

5. Not declaring losses to carry forward. If you do not file ITR by due date (July 31), you lose the right to carry forward losses. Even if you do not owe tax this year, file the ITR specifically to preserve carry-forward.

6. Choosing wrong tax regime. New regime has lower base rates but no Section 80C/80D deductions. For someone claiming ₹1.5L 80C + ₹50K 80D, the old regime is often better. The IT portal lets you compare both — use this feature.

7. Late filing or non-verification. Filing after July 31 attracts late fee under Section 234F (₹5,000 if income > ₹5 lakh, ₹1,000 otherwise). Filing but not e-verifying within 30 days makes the return invalid — same penalty.

What if you discover an error after filing?

The Income Tax Act provides three remedies:

1. Revised Return (Section 139(5)): File before December 31 of the assessment year. Replaces the original return entirely. Use this for any error or omission discovered before the deadline.
2. Updated Return / ITR-U (Section 139(8A)): File within 4 years from end of assessment year. Comes with an additional tax burden of 25-70 percent depending on when you file. Use only when you discover unreported income after the revised-return window. See our ITR-U detailed guide.
3. Rectification under Section 154: For arithmetic errors only (not new income additions). Filed online via the IT portal.

Penalties for non-compliance

• Late filing fee (Sec 234F): ₹5,000 if total income > ₹5 lakh, ₹1,000 if income ≤ ₹5 lakh
• Interest on unpaid tax (Sec 234A, B, C): 1 percent per month for delayed payment
• Penalty for under-reporting (Sec 270A): 50 percent of tax sought to be evaded
• Penalty for misreporting: 200 percent of tax (severe — applies to deliberate concealment)
• Prosecution (Sec 276CC): For willful tax evasion involving tax of ≥ ₹25 lakh, imprisonment 6 months to 7 years

For most retail investors, the practical penalty is the ₹1,000-₹5,000 late fee plus 1 percent monthly interest. The 200 percent misreporting penalty applies only to clear cases of concealment, not honest mistakes.

Refund processing timeline

Once your ITR is processed (typically 1-6 months after filing), refunds are credited to your pre-validated bank account directly:

• Processed within 7 days: roughly 25 percent of refunds (simple, low-value returns)
• Processed within 30 days: ~60 percent of refunds
• Beyond 90 days: typically returns under scrutiny or with mismatch flags

Track refund status under “View Filed Returns” on the IT portal. If you have not received refund after 6 months, raise a grievance via the e-Nivaran module.

Frequently Asked Questions

When is the due date for filing ITR-2 for FY 2026-27?

July 31, 2027 for individuals not requiring audit. The deadline is sometimes extended by CBDT — check official announcements close to the date.

Do I need to file ITR if my income is below ₹5 lakh?

If your total income (salary + capital gains + dividend) is below the basic exemption limit (₹3 lakh in new regime, ₹2.5 lakh in old regime), you are not legally required to file. However, filing is recommended even at low income for: claiming refund of TDS, carrying forward capital losses, providing income proof for loans, or visa applications.

Can I file ITR-2 if I am a senior citizen?

Yes. Senior citizens (60+ years) get a higher basic exemption (₹3 lakh old regime, ₹3 lakh new regime), and super-senior citizens (80+) get ₹5 lakh exemption in the old regime. Otherwise, the form and process are the same.

Should I file the same regime every year?

Salaried taxpayers can switch between old and new regimes every year. The IT portal computes tax under both and lets you pick the lower. For taxpayers with business income (ITR-3), the switch is more restricted — you can opt out of new regime only once, and then you must stay in old regime.

What if my broker tax P&L disagrees with AIS?

Trust your broker’s tax P&L (it is more granular and accurate). Report the broker numbers in your ITR. The IT department may flag the discrepancy, but you can respond with documentary evidence — broker contract notes and bank statements support your filing.

Do I need to attach documents while filing?

No. ITR-2 is filed without attachments. You should retain documents (broker statements, bank statements, Form 16) for 7 years in case of scrutiny notice.

Can I file ITR for multiple years together?

You can file the current year and the previous year (revised or belated). For older missed years, you must use ITR-U with additional tax of 25-70 percent.

Sources & Further Reading