Individuals who earn See this capital gains from the sale of assets like shares, mutual funds, or property must report these gains in their income tax return.
Here’s a step-by-step procedure on how to report capital gains while filing ITR-2:
Log in to the Income Tax e-filing Portal: Access the official Income Tax Department website and log in using your credentials.
Start a New Income Tax Return: Navigate to the ‘e-File’ section and select ‘Income Tax Returns’. Choose the appropriate assessment year, your status (individual, HUF, etc.), and select ITR-2 as the income tax return form.
Provide Basic Information: Enter your personal details, income from other sources (salary, house property, etc.), and other relevant information.
Report Capital Gains:
Click on the ‘Income Schedule’ tab.
Select ‘Schedule Capital Gains’.
Choose the type of capital asset you sold (equity shares, mutual funds, property, etc.).
Differentiate between short-term and long-term capital gains.
Provide detailed information about the sale transaction, including purchase price, sale price, expenses, and date of sale.
Calculate Tax Liability: The income tax software will automatically calculate your capital gains tax based on the applicable tax rates.
Review and Verify: Carefully review all the information entered in the return.
Generate ITR-V: Download the ITR-V form, sign it, and send it to the Income Tax Department’s Bangalore office within 120 days of filing the return.
Capital Gains Tax Saving Strategies
Capital gains tax can significantly erode your capital earnings. That’s why many tax-paying individuals seek strategies to reduce this burden. Here are some effective approaches:
Holding Assets Longer: Holding assets for over 12 months before selling can significantly reduce your tax liability due to the lower tax rate applicable to long-term capital gains.
Reinvesting Proceeds: Reinvesting capital gains within specific timelines can offer tax benefits. Consider investing in a new property, constructing a new property, or purchasing capital gain bonds.
Investing in Capital Gain Account Scheme (CGAS): CGAS offers a temporary tax deferral by allowing you to deposit capital gains and reinvest them within a specified timeframe.
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