Capital Gains Tax on Stocks, Mutual Funds & Crypto: What to Report in Your ITR (FY 2025-26)

Over the last few years, millions of Indians have opened Demat accounts, started SIPs, and dabbled in crypto. But while booking profits feels great, the reality check hits during tax season.

If you bought or sold a single stock, mutual fund, or crypto coin between April 2025 and March 2026, you cannot file the simple ITR-1.

The Income Tax Department now tracks every single trade through your Annual Information Statement (AIS). Reporting this data incorrectly—or assuming F&O trading is a "capital gain"—is a guaranteed way to trigger an Income Tax Notice.

At VJR Advisory Group, we help investors and traders file complex ITRs flawlessly. Here is your ultimate, jargon-free guide to understanding Capital Gains, F&O, and Crypto taxes for FY 2025-26.

⏱️ The Quick Tax Rate Cheat Sheet (FY 2025-26)

The government recently overhauled capital gains tax rates. Here is exactly what you owe on your profits this year:

1. Stocks & Equity Mutual Funds 📈

When you buy and sell shares of listed companies or equity mutual funds, your profits fall under "Capital Gains." You must file ITR-2 to declare these.

• Short-Term Capital Gains (STCG): If you hold the stock for less than a year before selling, your profit is taxed at a flat 20% (recently increased from 15%).
• Long-Term Capital Gains (LTCG): If you hold the stock for more than a year, your profit is taxed at 12.5%.

2. Intraday & F&O Trading: The "ITR-3 Trap" 🚨

This is the #1 mistake DIY tax filers make.

If you trade Futures and Options (F&O) or do Intraday trading (buying and selling a stock on the exact same day), the Income Tax Department does not consider this a Capital Gain.

They consider you a business owner.

• Intraday Trading: Classified as "Speculative Business Income."
• F&O Trading: Classified as "Non-Speculative Business Income."

What this means for you:

1. You cannot use ITR-2. You must file ITR-3, which requires a proper Balance Sheet and Profit & Loss statement.
2. The profits are added to your regular salary and taxed according to your normal income tax slab.
3. The Silver Lining: Because you are running a "business," you can deduct expenses! You can deduct brokerage charges, internet bills, trading software subscriptions, and even depreciation on your laptop against your F&O profits.

3. The Crypto Tax Nightmare 🪙

If you made money trading Bitcoin, Ethereum, or any Virtual Digital Asset (VDA), the tax rules are incredibly harsh.

• Flat 30% Tax: All crypto profits are taxed at a flat 30%, regardless of how long you held the asset. Plus, a 4% cess is added on top.
• No Deductions Allowed: You cannot deduct any expenses (like internet or setup costs) other than the actual cost of buying the crypto.
• No Setting Off Losses: This is the most brutal rule. If you make a ₹50,000 profit on Bitcoin but lose ₹30,000 on Dogecoin, you cannot set off the loss. You must pay 30% tax on the full ₹50,000 Bitcoin profit, and the ₹30,000 loss is completely ignored by the government.

4. The Power of "Setting Off" Losses 📉

If you had a bad year in the stock market, filing your ITR correctly is actually your best friend.

Under the Income Tax Act, you can "Set Off and Carry Forward" your stock market losses to reduce your tax burden in the future.

• STCG Losses: Can be adjusted against both STCG and LTCG profits.
• LTCG Losses: Can only be adjusted against LTCG profits.
• Carry Forward: If you still have losses left over, you can carry them forward for up to 8 years to offset future profits.

5. How to File: The "Tax P&L" Statement 🗂️

Do not try to manually calculate your profits by looking at your bank statement or your AIS. The AIS shows your total sales value, not your profit! If you declare the AIS sales value as your income, you will be taxed on thousands of rupees you don't owe.

The Fix: Log into your brokerage account (Zerodha, Groww, Upstox, ICICI Direct) and download the Tax P&L Statement for FY 2025-26. This document automatically calculates your STCG, LTCG, and F&O turnover perfectly formatted for your ITR.

Don't Let Trading Taxes Stress You Out. Let VJR Advisory Group Help!

Filing taxes as an investor is complicated. Mixing up Capital Gains with F&O Business Income, ignoring crypto rules, or failing to carry forward losses can result in heavy penalties or thousands of rupees in lost tax-saving opportunities.

At VJR Advisory Group, our Chartered Accountants specialize in trader and investor taxation. We seamlessly integrate your Tax P&L statements from multiple brokers, ensure you file the correct ITR form (ITR-2 or ITR-3), and maximize your legal loss set-offs.