ITR1 or ITR2, if equity mutual fund profit is 10,000/- (below 1 lakh)

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Jain JJ

Student

36 Points Posted on 09 July 2022

Are there any relevant sections in Income Tax Act which allows taxpayers to utilize ITR1, instead of ITR2 under following mentioned scenarios (if short term and long term capital gain is below 1 lac during redemption of equity mutual funds). (Note :- I have seen such clause in Income Tax Official Website, but can't retrive.)

i) Mr A (govt employee, salary Rs.8,00,000/-), bought some listed equity mutual fund on Dec 2020 and sold it on Nov 2021. The total profit was Rs.10,000. (Below 1 lakh). No STT was deducted during redemption. Can Mr. A use ITR1, instead of ITR2, since Rs.10,000 is below Rs. 1 lac.

ii) Mr A (govt employee, Salary Rs. 8,00,000/-), bought some listed equity mutual fund on Dec 2020 and sold it on Nov 2022. The total profit was Rs.12,000. (Below 1 lakh). No STT was deducted during redemption. Can Mr. A use ITR1, instead of ITR2, since Rs.12,000 is below Rs. 1 lac.

Replies (8)

Quick Summary

This discussion clarifies which Income Tax Return (ITR) form to use when you have profits from equity mutual funds below £1 lakh. Previously, any capital gains necessitated filing ITR 2. However, for Assessment Year 2026-27 onwards, ITR 1 may be used for Long Term Capital Gains (LTCG) under Section 112A if the profit is below £1.25 lakh and there are no brought-forward or carry-forward capital losses. Short Term Capital Gains (STCG) from equity or equity mutual funds, regardless of the amount, still require ITR 2.

prasad Nilugal

GST Practitioner & Accounts

9000 Points Posted on 09 July 2022

You have to file ITR2 because, no provision for
Capital gains in ITR 1.

Jain JJ

Student

36 Points Posted on 09 July 2022

Will 10k or 12k in above two different scenarios stands taxable, even if it is below Rs.1 lac ?

prasad Nilugal

GST Practitioner & Accounts

9000 Points Posted on 09 July 2022

In both cases holding period is less than 12 months, therefore it's short term capital gains, 1lac exemption is applicable only in case of Long term capital gains under section 112A of the Income tax act.
Just confirm one's again STT paid or not in both the case's and reply.

Jain JJ

Student

36 Points Posted on 09 July 2022

Originally posted by : prasad Nilugal
	In both cases holding period is less than 12 months, therefore it's short term capital gains, 1lac exemption is applicable only in case of Long term capital gains under section 112A of the Income tax act. Just confirm one's again STT paid or not in both the case's and reply.

2nd case concerns LTCG, holding period above 1 year (Dec 2020 - Nov 2022). "STT is not paid/deducted in 2nd case." It is confirmed. Can ITR1 be used if LTCG is below Rs. 1 lac (i.e 10k). (No logic behind to use ITR2, if proceeds are not taxed, more over such information of mutual fund redemption is already available in AIS.)

(*Regarding 1st case concerning STCG, STT paid/not paid, information is unclear, therefore shall be skipped*. Sorry for that. Only focus on LTCG, for time being.)

prasad Nilugal

GST Practitioner & Accounts

9000 Points Posted on 09 July 2022

In any Case you can not file ITR1 , No provision in ITR1 by default to show Capital Gains. You have to file ITR2 only.

CA Rashmi Gandhi

Chartered Accountant

44487 Points Posted on 10 July 2022

ITR-2 only

Tax Garden

Tax Consultant

2084 Points Posted on 07 July 2026

This thread needs an update for AY 2026-27.

Until AY 2025-26, the old answers were correct: any capital gains required ITR-2.

From AY 2026-27, CBDT expanded ITR-1 eligibility. You can now file ITR-1 with equity MF gains if:
- LTCG under Section 112A is below Rs 1.25 lakh
- No brought-forward or carry-forward capital losses
- No STCG under Section 111A from equity shares or MFs (STCG from equity still requires ITR-2)

For the scenarios in this thread:
- Rs 10,000 LTCG from equity MF: ITR-1 eligible (below 1.25L, no losses)
- Rs 12,000 STCG from equity MF under Section 111A: ITR-2 still required

For FY 2025-26 filing: if your gain is purely LTCG under 112A, below Rs 1.25L, and no BF losses, ITR-1 works. Any STCG from equity means ITR-2.

For the full ITR form selection guide for AY 2026-27, see Tax Garden [income tax filing services](https://taxgarden.in/services).

Aashok Kumar Sharma

Finance/Compliance Consultant

78018 Points Posted on 31 October 2026

Update: ITR-1 and ITR-4 now permit only LTCG under Sec 112A up to Rs 1.25 lakh with no loss to carry forward (allowed from AY 2025-26, not first in AY 2026-27); short-term gains of any amount, as in both cases here where units were held under 12 months, still require ITR-2.