FY25 tax returns: Split capital gains based on date of sale

BIFURCATE SALE BEFORE & AFTER JULY 23, 2024

- SAIKAT NEOGI

THE INCOME TAX department has introduced changes in the Income Tax Return (ITR) forms for Assessment Year (AY) 2025-26 on capital gains reporting. An assessee has to segregate capital gains based on the date of asset sale—before or after July 23, 2024. This distinction is crucial due to the mid-year amendments in tax rates and indexation rules.

If shares or units of equity-oriented mutual funds were sold on or before July 23, 2024, long-term capital gains (LTCG) tax (holding period more than 12 months) will be levied at 10% on gains above ₹1 lakh in a financial year. If sold after July 23, it will be 12.5% on gains above ₹1.25 lakh. Short-term capital gains (holding period less than 12 months) will be taxed at 15% if sold before July 23, 2024 and 20% after that date.

To calculate capital gains from immovable property acquired before July 23, 2024, taxpayers can choose 12.5% without indexation, or 20% with indexation. As the tax computation will differ for both periods, individuals need to ensure that the transactions reported in the ITR are accurate.