Show Taxation of Debt Fund's and FOF's Investing in US ETF's in the ITR2 Form

Report debt fund gains under "Capital Gains" in ITR2.

Specify gains from debt funds in the relevant sections for short-term or long-term capital gains depending on holding period.

2.STCG and LTCG from FOF Mutual Funds investing in US ETFs are treated as capital gains. 

Report in "Capital Gains" section of ITR2.

Short term capital gains (STCG): Taxed as per applicable slab rates.

Long-Term Capital Gains (LTCG): Taxed at 20% with indexation benefits for domestic funds. For FOFs investing in international ETFs like US ETFs, tax treatment may depend on specifics of the fund.

Debt mutual funds bought on or after April 1, 2023 no longer get indexation and the entire gain is taxed at your income slab rate, regardless of how long you held them. Report these in Schedule CG under the regular income head, not the concessional LTCG rate. FOFs that invest in overseas funds (like US ETFs) are treated as non-equity funds for tax purposes, so the same slab rate rule applies after April 2023 purchases.

In ITR-2 for AY 2026-27, you enter these in the Other-than-Equity capital gains section of Schedule CG. The broader framework for how different fund types are taxed this year is explained in this [AIS vs Form 26AS vs TIS guide for ITR prep](https://taxgarden.in/blog/ais-vs-form-26as-vs-tis-itr-prep-guide-ay-2026-27).