ITR 1 CAPITAL GAIN

Dear Sir,

 

Please suggest a salary person have some capital gain from mutual fund Rs. 230 loss in short term and Rs 2030 profit in long term so can we show under ITR1 to ignore loss

 

Please suggest

Replies (3)
Quick Summary
A salaried taxpayer has a short-term capital loss of Rs 230 and long-term capital gain of Rs 2,030 from mutual funds. While ITR-1 may be allowed for eligible LTCG up to Rs 1.25 lakh, claiming the STCL set-off requires ITR-2. Filing ITR-2 is generally recommended.

Since there is both LTCG and STCL from mutual fund transactions, it is advisable to file ITR-2 and report both transactions. The STCL of ₹230 can be set off against LTCG of ₹2,030, resulting in a net gain of ₹1,800. Ignoring the loss merely to file ITR-1 is not recommended.

Yes, it's a change from AY2025-26 onwards. Even if you have capital loss (BWC) of zero and capital gain (LTCG) from listed shares or equity mutual funds is not more than ₹1.25 lakh, you can file ITR-1 (Sahaj) provided all the conditions of ITR-1 are satisfied.

In the event that you have, however:

  • Short-Term Capital Gains (STCG), and
  • LTCG exceeding ₹1.25 lakh,
  • Capital gains taxed at the lower of cost or market, and
  • Capital gains from property and unlisted shares, foreign assets, etc.

 If you do, you will be required to submit ITR-2 (or ITR-3 if business/professional income is involved). 

Now it depends on the type and amount of capital gain. Please specify if it is LTCG or STCG and from which asset (shares, mutual funds, property, etc.) to give a more precise answer.

The existing replies are both partially right, and the confusion is understandable because the ITR-1 eligibility rules changed from AY 2026-27.

From AY 2026-27, ITR-1 was expanded to allow reporting of LTCG under section 112A (listed equity or equity mutual funds) up to Rs 1.25 lakh, provided: no carried-forward capital losses exist, no capital gains from property or unlisted shares, and all other ITR-1 eligibility conditions are met.

In this specific case, there is a STCL of Rs 230. Here is where ITR-1 falls short. ITR-1 has no schedule for capital loss set-off or carry-forward. If you want to set off the short-term loss against the LTCG of Rs 2,030 (resulting in net LTCG of Rs 1,800), you must file ITR-2 to use the CYLA and BFLA schedules.

If the person is comfortable not claiming the set-off (the Rs 230 loss is small and cannot be carried forward in ITR-1 either way), filing ITR-1 with only the LTCG of Rs 2,030 is technically permissible since it is below Rs 1.25 lakh. But abandoning the loss is generally not advisable.

The recommended call: file ITR-2 this year. It reports both STCL and LTCG correctly, allows the set-off, and the net taxable LTCG of Rs 1,800 will attract zero tax since it is well below the Rs 1.25 lakh exemption.

This [common ITR mistakes guide for AY 2026-27](https://taxgarden.in/blog/common-itr-filing-mistakes-refund-delay-notices-ay-2026-27) covers wrong form selection as one of the top errors salaried individuals make at the start of ITR season.

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