LTCG IN ITR2 FROM DEBT FUNDS ACQUIRED IN 2020

THE SOLD UNITS ARE IN DEBT FUNDS (AND NOT EQUITY )HELD FOR MORE THAN 3 YEARS PURCHASED IN 2020 SOLD AFTER JULY 2024 AND HENCE QUALIFY FOR LTCG WITHOUT INDEXATION TAXABLE AT 12.5%

SORRY , THIS IS AN EDIT

THE SOLD FUNDS ARE NOT EQUITY, BUT DEBT FUND

Negate interest cost on debt fund visavis Long term capital gain.

Negate interest cost on debt fund visavis Long term capital gain.

Originally posted by : Manjunath Sowmya
	SORRY , THIS IS AN EDIT THE SOLD FUNDS ARE NOT EQUITY, BUT DEBT FUND

UNDER WHICH OF THE FOLLOWING SUCH CAPITAL GAINS HEADS THE LTCG WITHOUT INDEXATION CAPITAL  GAINS FROM DEBT FUNDS BOUGHT IN 2020  TO BE SHOWN IN ITR 2

THANKS

Dear Manjunath,

For LTCG from debt funds acquired in 2020 and switched out in September 2024, you need to report this under "Schedule CG" in ITR2. Here's the correct reporting:

**Schedule:** Capital Gains (Schedule CG)
**Section:** Part A - Long Term Capital Gains 
**Sub-section:** A2 - Other Assets (since debt funds are not equity shares)

**Key Points:**

1. **Nature of Asset:** Select "Other Assets" as debt funds don't qualify as equity shares or specified securities.

2. **Tax Rate:** 12.5% without indexation (as per Budget 2024 amendments for assets sold after 23rd July 2024).

3. **Holding Period:** More than 36 months for debt funds (your case: 2020 to Sept 2024 = ~4 years).

4. **Calculation:**
   - Sale Value: Amount received from switch/redemption
   - Cost of Acquisition: Purchase price in 2020
   - LTCG = Sale Value - Cost of Acquisition
   - Tax = LTCG × 12.5%

**DO NOT report under:**
- Equity shares section (A1) - as correctly identified by you
- Business income - these are capital gains
- Other sources - incorrect classification

**Additional Considerations:**
- Set off any available capital losses
- Consider any expenses related to transfer
- Ensure proper documentation of switch/redemption statements

The recent amendment removing indexation benefit but reducing tax rate to 12.5% applies to your case since the sale happened post-July 23, 2024.

Hope this clarifies your query.

Best regards

SIR

IS IT PART B 9 OR B 3(i)

PART A REFERS TO STCG I SUPPOSE AS PER ITR 2

THANKS

Good news, your 2020 purchase is grandfathered under the old LTCG rules.

Finance Act 2023 removed LTCG benefits for debt mutual funds, but only for units purchased on or after April 1, 2023. Units bought before that date still qualify as long-term capital gains if held for more than 3 years.

Since you acquired in 2020 and are now selling in FY 2025-26, you are well past 3 years. Your gains qualify as LTCG under Section 112.

The rate depends on when you sold:
- Sold before July 23, 2024: 20% with indexation benefit
- Sold on or after July 23, 2024: 12.5% without indexation (Finance Act 2024 change)

In ITR-2, report these in Schedule CG under long-term capital gains, others (not 112A). There is no Rs 1.25 lakh exemption for debt fund LTCG; the full gains are taxable.

This [LTCG and STCG guide for AY 2026-27](https://taxgarden.in/blog/capital-gains-tax-india-ltcg-stcg-ay-2026-27) covers both equity and debt fund schedules with rate tables.