Capital Gains Basics: Which ITR Form Do You Need?

By the MyTaxLocker Team · Updated 11 June 2026

Sold shares, mutual funds, a house, or gold during the year? That profit is a capital gain, and it usually changes which ITR form you must file. Here are the basics.

Short-term vs long-term

Capital gains are split by how long you held the asset. The holding period that makes a gain "long-term" differs by asset type — listed equity shares and equity mutual funds become long-term sooner than, say, property or unlisted assets. Short-term and long-term gains are taxed under different rules.

Equity vs other assets

For listed equity and equity mutual funds (where the Securities Transaction Tax applies), short- and long-term gains are taxed at separate rates, and long-term gains are taxed only above an annual exemption threshold. For property, gold and other assets, different rules apply, and the treatment of indexation has changed in recent years — so check the current method for your asset and year.

Which ITR form?

Here's the part that trips people up: if you have capital gains, you generally cannot use ITR-1 (Sahaj) or ITR-4 (Sugam). Most taxpayers with capital gains file ITR-2 (no business income) or ITR-3 (with business income). Eligibility nuances change from year to year, so confirm the correct form before filing.