What is the ₹1.25 lakh exemption on long-term gains?
Long-term capital gains on listed equity shares and equity mutual funds up to ₹1.25 lakh in a financial year are exempt; the excess is taxed at 12.5%. It applies per taxpayer per year, and unused exemption cannot be carried forward. Spreading sales over years can use it more than once.
How are ELSS and SIP investments taxed?
ELSS funds are equity funds with a three-year lock-in, so gains on each instalment are long-term and taxed under the equity rules. Each SIP instalment is a separate purchase, and redemptions are matched first-in-first-out. We build the lot-wise computation from the fund's statement.
Are dividends from shares and mutual funds taxable?
Yes. Dividends are taxed at your slab rate, with 10% TDS on dividends above the threshold. Dividend income is separate from capital gains and reported under other sources. Expenses against dividend are limited to interest up to 20% of the dividend.
What if the broker's report shows wrong gains?
Brokers sometimes ignore corporate actions or the grandfathering rule. We recompute from the lot data, and where we find a difference we use the correct figure and keep the reconciliation on file in case of a mismatch notice.
What if I bought shares through ESOPs?
For ESOPs, the cost for capital gains is the perquisite value taxed at exercise. The gain after exercise is long-term or short-term based on the exercise date. We take the exercise date and value from the employer's statement. See
foreign income and ESOPs for foreign RSUs.
Is gain on a buyback taxed differently?
From the rules effective on buybacks after 1 October 2024, the amount received on a buyback is generally taxed as deemed dividend in the shareholder's hands, and the cost of the shares is treated as a capital loss. We check the date and the treatment for each buyback in your statements.
Do I have to pay tax on capital gains even if I reinvest?
Not always. Sections 54, 54F and 54EC allow exemption from long-term capital gains when you reinvest in specified assets within fixed time limits. The exemption is conditional, so the reinvestment must match the section and the deadline. We check eligibility before you commit money, not after the return is filed.
Which ITR form is used when I have capital gains?
Most individuals with capital gains file ITR-2. If you also have business or professional income, it is ITR-3. ITR-1 is allowed only for long-term capital gains on listed shares or equity mutual funds under section 112A up to ₹1.25 lakh, and only when you have no other capital gains.
Is advance tax payable on capital gains?
Yes, once the gain arises. Advance tax is due on capital gains in the instalment period in which the sale happens, and any gain in the last instalment window can be paid by 15 March. Interest under section 234C is avoided if you pay in the remaining instalments after the gain arises.
