How to Report Capital Gains in ITR-3 AY 2026-27

If you have business or professional income along with capital gains, it is important to report your capital gains correctly while filing ITR-3 for AY 2026-27.

Capital gains may arise from the sale or transfer of assets such as shares, mutual funds, land, buildings, securities and other capital assets. While filing ITR-3, these gains are generally reported under the Schedule CG – Capital Gains.

For AY 2026-27, the ITR utility and validation rules include separate treatment for different categories of short-term and long-term capital gains.

This guide explains how to report capital gains in ITR-3, the difference between STCG and LTCG, important documents, Schedule CG, equity shares and mutual funds, property sale, capital losses and common filing mistakes.

What Is Capital Gain?

A capital gain generally arises when a capital asset is transferred for consideration and the resulting computation produces a gain.

Examples of capital assets may include:

• Equity shares
• Mutual funds
• Land
• Residential property
• Commercial property
• Bonds
• Securities
• Other investment assets

Capital gains are broadly classified as:

Short-Term Capital Gain (STCG)

Gain arising from the transfer of an asset that qualifies as short-term under the applicable holding-period rules.

Long-Term Capital Gain (LTCG)

Gain arising from the transfer of an asset that qualifies as long-term under the applicable holding-period rules.

The holding period and tax treatment can differ depending on the type of asset.

Who Needs to Report Capital Gains in ITR-3?

Having capital gains does not by itself mean that ITR-3 is always required.

ITR-3 is relevant where the taxpayer has income from business or profession along with other applicable income heads, including capital gains, and is not eligible for ITR-1, ITR-2 or ITR-4.

For example:

Business Income + Capital Gains

Salary + Business Income + Capital Gains

Business Income + Rental Income + Capital Gains

may require ITR-3 depending on the taxpayer's complete facts.

For a detailed eligibility guide:

Who Should File ITR-3 for AY 2026-27

Where Is Capital Gain Reported in ITR-3?

Capital gains are reported in Schedule CG – Capital Gains of ITR-3.

The schedule captures the relevant details needed to calculate capital gains or losses from different types of assets.

The Income Tax Department's ITR guidance explains that Schedule CG is used to report short-term and long-term capital gains/losses for different categories of capital assets.

Depending on the transaction, you may need information such as:

• Description of asset
• Date of purchase
• Date of sale/transfer
• Sale consideration
• Cost of acquisition
• Cost of improvement, where applicable
• Expenses related to transfer
• Capital gain or loss
• Relevant tax treatment

How to Report Capital Gains in ITR-3?

Step 1: Identify the Capital Asset

First determine what asset was sold or transferred.

For example:

• Equity shares
• Mutual funds
• Land
• Building
• Bonds
• Securities
• Other capital assets

Different assets can have different holding-period and tax-treatment rules.

Step 2: Determine Whether the Gain Is Short-Term or Long-Term

After identifying the asset, determine whether the resulting gain is STCG or LTCG according to the applicable provisions.

This distinction is important because the applicable tax rate and computation can differ.

Do not classify a gain simply based on how long you personally consider the investment to be "long term."

The applicable statutory holding period for the particular asset should be considered.

Step 3: Calculate Sale Consideration

The sale consideration is the amount received or receivable from the transfer of the asset, subject to the applicable provisions.

For example:

Sale Price of Shares = ₹8,00,000

or

Sale Price of Property = ₹50,00,000

The relevant transaction statement, sale deed or broker statement should be checked before entering the figures in Schedule CG.

Step 4: Calculate Cost of Acquisition

The cost of acquisition is an important component in determining capital gains.

For example:

Sale Consideration = ₹8,00,000

Cost of Acquisition = ₹5,00,000

The basic capital gain before considering applicable adjustments and transfer expenses would be:

₹8,00,000 – ₹5,00,000 = ₹3,00,000

The actual computation depends on the nature of the asset and applicable provisions.

Step 5: Consider Transfer Expenses

Certain expenses directly related to the transfer may be relevant while computing capital gains, subject to the applicable provisions.

Examples may include:

• Brokerage
• Commission
• Certain transaction-related expenses
• Legal expenses directly connected with transfer

Maintain proper supporting documents for such expenses.

Capital Gains on Equity Shares

Capital gains from listed equity shares can require careful reporting.

Before filing ITR-3, collect:

• Contract notes
• Broker capital-gain statement
• Purchase details
• Sale details
• STT information, where applicable
• ISIN/security details where relevant
• Dividend information, if separately applicable

If you have sold multiple shares during the year, do not rely only on your bank statement.

A broker's capital gains statement can help reconcile purchase and sale transactions.

Capital Gains on Mutual Funds

If you sold mutual fund units during FY 2025-26, the transaction may result in STCG or LTCG depending on the nature of the fund and applicable holding-period provisions.

Keep:

• Mutual fund capital gains statement
• Purchase date
• Purchase value
• Redemption date
• Redemption value
• Transaction charges, where relevant

If multiple mutual funds were sold, reconcile the consolidated capital-gain statement before filing.

Capital Gains on Sale of Property

Capital gains can also arise from the sale of:

• Residential house
• Flat
• Commercial property
• Land
• Building

Property-related capital-gain computation can be more detailed because taxpayers may need to consider:

• Purchase price
• Purchase date
• Sale consideration
• Improvement cost
• Transfer expenses
• Applicable valuation provisions
• Relevant tax provisions

For property transactions, retain the original purchase deed, sale deed, improvement bills and other supporting documents.

Capital Gains and Business Income in ITR-3

This is an important area for business owners.

Suppose a taxpayer has:

Business Profit = ₹10,00,000

Capital Gain from Shares = ₹2,00,000

The ₹2,00,000 capital gain should not automatically be added to business turnover or business profit.

Generally:

Business Profit → Profits & Gains from Business or Profession

Capital Gain → Capital Gains

These are separate income heads.

For detailed business-income reporting:

How to Report Business Income in ITR-3 AY 2026-27

Salary + Business Income + Capital Gains

A taxpayer can have multiple sources of income.

For example:

• Salary: ₹8,00,000
• Business profit: ₹5,00,000
• Capital gains: ₹2,00,000
• Bank interest: ₹40,000

These should be reported under their respective heads.

Salary → Salary

Business Profit → Business/Profession

Capital Gain → Capital Gains

Bank Interest → Other Sources

For more information on salary reporting:

How to Report Salary Income in ITR-3 AY 2026-27

Capital Gains and Rental Income

A business owner may also have rental income along with capital gains.

For example:

Business Income + Rental Income + Capital Gains

Each income source needs to be reported under the appropriate head.

Rental income is generally reported under Income from House Property, while capital gains are reported under Capital Gains.

Read our detailed rental-income guide:

How to Report Rental Income from House Property in ITR-3 AY 2026-27

Capital Gains on Shares and Mutual Funds – Important AY 2026-27 Point

For AY 2026-27, the Income Tax Department states that the earlier requirement to bifurcate capital gains in Schedule CG based on whether the transfer occurred before or after 23 July 2024 has been removed. The applicable STCG/LTCG tax rates have also been modified for AY 2026-27.

Therefore, taxpayers filing ITR-3 for AY 2026-27 should use the current return utility and applicable rules rather than relying on an older ITR format.

Capital Loss in ITR-3

Capital transactions do not always result in a gain.

You may also have:

Short-Term Capital Loss (STCL)

or

Long-Term Capital Loss (LTCL)

Capital losses have specific rules regarding their set-off and carry-forward.

Therefore, taxpayers should report eligible capital losses correctly instead of ignoring them.

A loss that is not properly reported in the return may affect the ability to claim the applicable carry-forward benefit.

Capital Gains and Schedule 112A

Where applicable, taxpayers may also need to provide details under Schedule 112A for specified long-term capital gains transactions involving equity shares, equity-oriented funds or units of business trusts on which STT is paid.

The Income Tax Department's ITR guidance specifically refers to Schedule 112A for such transactions.

Keep your broker or mutual-fund statement ready before completing this section.

Capital Gains and Virtual Digital Assets

Taxpayers should also consider whether they have transferred Virtual Digital Assets (VDAs) during the financial year.

The ITR-3 validation rules separately connect income from transfer of VDAs with Schedule VDA and Schedule CG.

If applicable, VDA transactions should be reported using the relevant schedule rather than being treated like ordinary share or mutual-fund transactions.

Documents Required for Reporting Capital Gains

Before filing ITR-3, keep the following documents ready:

For Shares

• Broker statement
• Contract notes
• Purchase details
• Sale details
• Capital-gain statement
• Demat transaction statement

For Mutual Funds

• Mutual-fund capital-gains statement
• Purchase statement
• Redemption statement
• Transaction details

For Property

• Purchase deed
• Sale deed
• Improvement bills
• Property-related expenses
• Registration documents

Tax Records

• PAN
• Aadhaar
• Form 26AS
• AIS
• TDS details
• Previous ITR

For the complete ITR-3 document checklist:

Documents Required for ITR-3 Filing AY 2026-27

Capital Gains and AIS

Before filing ITR-3, taxpayers should check their Annual Information Statement (AIS).

AIS can contain information relating to securities and other reported financial transactions.

Compare the AIS information with:

• Broker statement
• Mutual-fund statement
• Bank statement
• Contract notes
• Capital-gain report

If there is a mismatch, investigate it before filing.

Do not simply copy an AIS figure without understanding the transaction behind it.

Capital Gains and Form 26AS

Form 26AS should also be reviewed for relevant tax-credit and TDS information.

Where TDS has been deducted, ensure that the credit claimed in ITR-3 matches the available tax records.

Common Mistakes While Reporting Capital Gains in ITR-3

1. Reporting Only the Profit

Capital-gain computation requires transaction-level information. Do not simply enter the final profit without supporting calculation.

2. Confusing Business Income With Capital Gains

Investment gains and business trading income can have different tax treatment depending on the facts.

3. Using Incorrect Purchase Cost

Always verify the actual cost of acquisition from reliable records.

4. Ignoring Transfer Expenses

Eligible transfer-related expenses should be considered where applicable.

5. Missing Capital Losses

Do not ignore eligible capital losses. Correct reporting can be important for applicable set-off and carry-forward provisions.

6. Not Reconciling Broker Statements

Always compare broker statements with your own records and AIS.

7. Using an Old Capital-Gain Format

AY 2026-27 has changes in the reporting structure and applicable rates, including removal of the earlier before/after 23 July 2024 bifurcation in Schedule CG.

8. Selecting the Wrong ITR Form

Capital gains alone do not automatically mean ITR-3.

The complete income profile must be considered.

For a complete ITR-3 overview:

ITR-3 Filing for AY 2026-27

How to Report Capital Gains in ITR-3 Online

The broad filing process is:

1. Login to the Income Tax e-Filing portal.
2. Select Assessment Year 2026-27.
3. Select ITR-3.
4. Enter personal information.
5. Report salary income, if applicable.
6. Report house property income, if applicable.
7. Report business/profession income.
8. Open Schedule CG.
9. Enter relevant capital-gain transaction details.
10. Report applicable capital losses.
11. Complete Schedule 112A or other relevant schedules, where applicable.
12. Report other sources of income.
13. Verify TDS and tax payments.
14. Calculate tax liability.
15. Submit the return.
16. Complete e-verification.

For a detailed filing process:

How to File ITR-3 Online for AY 2026-27

ITR-3 Capital Gains Filing Checklist

Before submitting your return, check:

• All shares sold during the year identified
• Mutual-fund redemptions checked
• Property transactions reviewed
• Purchase cost verified
• Sale consideration verified
• Transfer expenses checked
• STCG/LTCG classification verified
• Broker statement reconciled
• AIS checked
• Form 26AS checked
• Schedule CG completed
• Schedule 112A completed, where applicable
• Capital losses reported
• VDA transactions checked, if applicable
• Business income separately reported
• Salary income separately reported
• Rental income separately reported
• Tax regime reviewed
• Tax liability checked
• ITR submitted and e-verified

Final Takeaway

If you have capital gains along with business or professional income, it is important to report them correctly in ITR-3 for AY 2026-27.

Capital gains should be calculated based on the nature of the asset, relevant purchase and sale details, applicable holding-period rules and the provisions applicable to that transaction.

For AY 2026-27, taxpayers should also use the updated ITR structure and current tax rules. The Income Tax Department confirms that ITR-3 covers Individuals/HUFs having business or profession income along with other applicable heads such as Salary, House Property, Capital Gains and Other Sources, subject to ITR eligibility.

Proper reconciliation of broker statements, mutual-fund statements, property documents, AIS and Form 26AS can help reduce errors while filing the return.

Related ITR-3 Guides

ITR-3 Filing for AY 2026-27

Who Should File ITR-3 AY 2026-27

Documents Required for ITR-3 Filing AY 2026-27

ITR-3 or ITR-4 – Which Is Right for You?

How to File ITR-3 Online AY 2026-27