Long-term gains from equity investments in ITR forms

Long-term capital gains from different sources are treated differently from an income tax perspective. In case of equity-related investments, all long-term capital gains are tax-free. For equity instruments, long-term is defined as a period of 12 months. Hence, all gains from equity investments that are held for over one year will be completely exempt from tax.

Equity instruments that qualify for tax-free long-term gains include shares listed on recognised stock exchanges, equity mutual funds, balanced funds and any other instrument that invests at least 65% of its assets in equities.

But while the gains are tax-free, they do have to be mentioned in the ITR form at the time of filing your income tax returns. This detail has to be mentioned under the ‘Exempt Income’ section.

For example, in ITR-1, which is the most commonly used ITR form, the Exempt Income section is under Part D, as D20.

Exempt income in ITR-1

While you don’t have to pay any taxes on long-term capital gains from equity investments, the income earned should be mentioned to avoid facing any compliance issues or getting a notice from the Income Tax Department.

If you have any further queries on e-filing your income tax returns, our guide on e-filing income tax online will help you.

If you’re e-filing your income tax returns on ClearTax, add your exempt income in the following way:

Go to Income Sources – Other Incomes

Efiling on ClearTax

Under Other Incomes, there is an Exempt Income section where you can add the details

Efiling on ClearTax

Need help? Get one of our experts to prepare and file your tax returns for you.

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