File ITR Even With LTCG Under Rs 1.25 Lakh: Income Tax Department

Even if your long-term capital gains from stocks are under Rs 1.25 lakh, you must still file your Income Tax Return for AY 2026-27. While this amount is tax-exempt, the Income Tax Department requires you to report these gains. Failure to disclose can lead to issues. Learn how to correctly report these gains in your ITR.

If you are salaried, a pensioner, a students and anyone else who does not need to do a tax audit, make sure to file your income tax return (ITR) on or before July 31, 2026 for AY 2026-2027 (which is different from Tax Year 2026-2027). For Tax Year 2026-2027, ITR filing deadline is July 31, 2027.

But hey, if your total income is below the basic exemption limit and you don't have any special rate income or haven't done any specific transaction like foreign travel or paying a credit card bill above a specific limit, then you are not required to file an ITR.

Special rate income includes long term capital gains (LTCG). So if your long term capital gains are up to Rs 1.25 lakh, you won't need to pay any income tax, but you still need to file ITR. Just so you know, long term capital gains up to Rs 1.25 lakh from listed equities, including equity mutual funds, are tax-exempt.

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Chartered Accountant Abhishek Soni, co-founder, Tax2Win says: "Even if Long-Term Capital Gain (LTCG) under Section 112A is below Rs 1.25 lakh and no tax is payable, such gains should still be disclosed in the ITR. The exemption limit only means the gain may not be taxable. It does not remove the reporting requirement."

This means even if you made less than Rs 1.25 lakh LTCG from equities this year, you need to file ITR and report it.

Also read: Zero income tax in Form 16? You may still have to file an ITR in these cases

Can you use ITR-1 to report LTCG?

ITR-1 can be used in eligible cases where the LTCG under Section 112A (no tax up to Rs 1.25 lakh) is within the prescribed threshold, there are no brought-forward or carry-forward capital losses, and there are no complex capital gain situations.

You can use ITR-2 in cases where:

capital losses exist,

there are multiple capital gain transactions,

foreign assets/income are involved,

or the taxpayer has more complex investments.

Steps to report LTCG below Rs 1.25 lakh in ITR

Soni explains how to show LTCG income in ITR:

Step 1: Log in to:

Income tax e-filing portal

1. Select the applicable ITR form and go to:

"Capital Gains" section in ITR-1, or

"Schedule 112A" in ITR-2.

Also read: ITR filing 2026: 7 smart ways salaried employees can reduce tax under the new income tax regime

Step 2: Enter details from broker/CAMS/NSDL statements:

ISIN,

name of share or mutual fund,

purchase date,

sale date,

sale value,

cost of acquisition,

Fair Market Value (FMV) as on 31 January 2018, where grandfathering provisions apply.

Step 3: The utility will automatically compute:

total LTCG,

exemption available under Section 112A,

taxable LTCG, if any.

If LTCG is below Rs 1.25 lakh:

taxable LTCG may become NIL,

but disclosure in ITR remains important.

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