Capital Gains Tax Reporting in ITR: Mistakes to Avoid & Smart Planning Tips (FY 2025–26)
Reporting capital gains in ITR correctly is critical for compliance and tax efficiency. Mistakes in Schedule CG can lead to penalties, notices, or incorrect tax calculation. This guide covers common mistakes, smart tips, and practical examples to ens...
Reporting capital gains in ITR correctly is critical for compliance and tax efficiency. Mistakes in Schedule CG can lead to penalties, notices, or incorrect tax calculation.
This guide covers common mistakes, smart tips, and practical examples to ensure accurate reporting of:
Short-term & long-term gains
Equity, mutual funds, property, and crypto assets
Exemptions under Sections 54, 54F, 54EC, etc.
Common Mistakes in Reporting Capital Gains
| Mistake | Description |
| 1. Incorrect holding period | Reporting LTCG as STCG or vice versa |
| 2. Ignoring indexation | Not applying indexed cost for LTCG on property |
| 3. Omitting assets | Missing mutual funds, crypto, or foreign assets |
| 4. Incorrect exemptions | Not claiming exemptions under Section 54, 54F, 54EC |
| 5. Reporting in foreign currency | Not converting to INR using RBI TT rate |
| 6. Documentation errors | Lack of purchase/sale invoices or mutual fund statements |
Tip: Cross-check CII, cost of acquisition, and sale consideration before filing.
Step-by-Step Smart Reporting Tips
1. Categorize Gains Properly
STCG: Short-term shares, mutual funds, crypto
LTCG: Equity >12 months, property >36 months, debt funds >36 months
2. Apply Correct Tax Rates
STCG: 15% for equity, slab rate for property & debt funds
LTCG: 10% (equity over ₹1 Lakh), 20% with indexation (property & debt funds)
3. Claim All Eligible Exemptions
Section 54: Sale of residential property → reinvestment in new property
Section 54EC: Investment in specified bonds (NHAI, REC)
Section 54F: Sale of property → purchase of new property
4. Maintain Proper Documentation
Sale deed, purchase deed, mutual fund statements, crypto transaction records
RBI TT rate conversion proof for foreign assets
Example: Avoiding Mistakes
Scenario: Selling a residential property
Purchase Price (FY 2012–13): ₹40,00,000
Sale Price (FY 2025–26): ₹90,00,000
Indexed Cost (CII 348 / 167): 40,00,000 × (348/167) = ₹83,23,000
LTCG: ₹90,00,000 – ₹83,23,000 = ₹6,77,000
Mistake to Avoid: Reporting without indexation → tax liability = ₹50,00,000 × 20% = ₹10,00,000
Correct Filing: Report ₹6,77,000 LTCG using indexation
Special Tips for Crypto & Digital Assets
Track all purchases & sales
Calculate STCG or LTCG per holding period
Convert all values to INR
Avoid mixing gift & purchase transactions without proper documentation
Frequently Asked Questions (FAQ)
Q1: Can I report exempt capital gains?
Yes, even exempt gains must be reported to Schedule CG.
Q2: How do I report multiple asset sales?
Use separate entries for each asset type, purchase/sale dates, and costs.
Q3: Is crypto reporting mandatory in Schedule CG?
Yes, treat as capital assets and report STCG or LTCG accordingly.
Q4: What penalties apply for incorrect reporting?
Penalty under Section 271F up to ₹1,00,000 and addition of undisclosed income.
Internal Links
Schedule CG Explained
ITR Filing Online Step-by-Step
Tax Saving Tips on Property Sale
Conclusion
Accurate capital gains reporting in ITR ensures:
Compliance with income tax laws
Avoidance of penalties and notices
Optimized tax liability through exemptions and planning
WonderTax experts can help you report STCG, LTCG, property, mutual funds, and crypto gains correctly, ensuring 100% compliance for FY 2025–26.
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