How to Fill Short Term Capital Gain in ITR-2 AY 2019-20 sounds complicated, which it really is, the whole capital gain sheet in ITR-2 consists of sections and subsections.
ITR form Schedule CG (Capital gain) sheet only allows the user to enter their Short term and Long term capital gain details.
- Section A – For Short term Capital gain (STCG)
- Section B – For Long Term Capital Gain (LTCG)
In this article, you will understand step by step process of filling Short term capital gain details of (Property, Equity, or any other related asset).
You will get a complete description of every column why it’s important?
Steps to fill Short Term Capital Gain in ITR-2 for land or building
Under section ‘A’ you will find subsection 1 – under that, you have to consolidate all your information related to sales of land or building or both.
- (ai) – Full Value of consideration received/receivable – You have to enter the complete amount you have received during your property/land deal.
- (aii) – Value of property according to stamp valuation authority – All you have to enter is the circle rate valuation of your property. The actual Circle rate is sometimes higher or lower as compared to your deal.
- (aiii) – Full value of consideration adopted as per section 50C for the purpose of capital gain [in case (aii) does not exceed 1.05 times (ai), take this figure as (ai), or else take – According to income tax department if the circle rate is higher 1.5 times from the sales value, the value of circle must be considered.
What is Section 50C of Income Tax Act?
Section 50C of Income Tax Act, 1961 states that if the value of transaction of property or land is less then the circle rate or stamp duty rate, under this scenario the valuation of the stamp duty will be considered as the sale consideration for the purpose of computation of capital gains on transfer of land or building or both.
- (bi) Cost of acquisition without indexation – Cost of Purchase of property, Land or both, the indexation benefit is not permitted in STCG.
- (bii) Cost of Improvement without indexation – Any renovation work occurred on several intervals into your property, you can enter the amount here. No indexation benefit is permitted too.
- (biii) Expenditure wholly and exclusively in connection with transfer – Expenditure made in transfer or execution of deal like (advertisement, brokerage).
Finally, you will get the balance amount of short term capital gain, Income tax department allow the taxpayer to ‘Deduct under section 54B (specify details in item D below).
What are the provisions of Section 54B of Income Tax Act 1961?
Section 54B gives relief to those farmers wants to shift his agricultural land for certain reason and hence he sold his old agricultural land and from the sale proceeds he purchased another agricultural land, under this section, there is no such tax implication on the sales amount under certain conditions.
Specify Details in items D below:
It is mandatory to fill, if you are entering the details u/s 54B.
- Date of transfer of original assets.
- Cost of New agricultural land.
- Date of Purchase of New Agriculture Land
- Amount deposit in capital gain account scheme before the due date.
- Amount of deduction claimed.
Refer complete information for clarification Capital Gains Sale of Agricultural Land.
It is also required to furnish basic information of buyers in the prescribed format already available in the form.
Steps to fill Short Term Capital Gain in ITR-2 for Equity shares
This portion not only available for equity shares but also for the unit of equity-oriented mutual fund or unit of the business trust.
- (ia) – Full Value of consideration – Under this section, you have to enter the amount you received from the sales of equity, Equity-based mutual fund.
- (ibii) – Cost of acquisition without indexation – Cost of Purchase of equity shares & Equity oriented mutual fund (MF), the indexation benefit is not permitted in STCG.
- (ibiii) – Expenditure wholly and exclusively in connection with transfer – Expenditure made in transfer or execution of deal like brokerage in case of share transaction.
- Finally, the loss which not allowed u/s 94(7) or 94(8) – The detailed explanation is as follow:
What is Loss to be disallowed u/s 94(7) or 94(8) in ITR-2
The calculation of STCG/LTCG allows the taxpayer to deduct the loss in capital gain from one criterion to another. During filling your income tax return you will find a column ‘loss to be disallowed u/s 94(7) or 94(8)’ under filling details of long term capital gain for sales of Equity and mutual fund slot.
The concept is some smart investors purchase equity shares just before they declare the dividend and sell just after dividend declaration even if they are on loss.
Technically they are benefiting from both sides, dividend payout is tax-free and the loss they booked is adjusted in some other LTCG.
Basically, this section disallows you to write off your loss 3 months after the sale of shares you purchase in case of shares and within 9 months in case of units. This is also known as Dividend Stripping in India.
If you look carefully at the above example I have entered the loss amount back in positive due section 94(7), {you have to be honest because if you will not disclose the facts income tax department grab you back, as they already have all the details of your purchase and sales dates along with dividend payout details of the company}.
The dividend you received under that period will be 100% exempted.
Steps to fill Short Term Capital Gain in ITR-2 for Share of the company other the quoted share
This is the fifth section of short term capital gain which required to disclose information for the assets sold include company other than quoted shares.
The basic step is as similar as above:
- (aia) – Full Value of consideration received/receivable in respect of unquoted shares – You have to enter the complete amount you have received in respect of unquoted shares.
- (aib) – Fair market value of unquoted shares determined in the prescribed shares.
- (aic) – Full value of consideration in respect of unquoted as per section 50CA for the purpose of capital gain (higher of a or b)
What is section 50CA of Income tax act
Under this section the value received and fair market value of unquoted shares are different, under this scenario the higher price must be considered, which is taken by default in income tax return form ITR2.
- (bi) Cost of acquisition without indexation – Cost of Purchase of shares of the company other then unquoted shares.
- (bii) Cost of Improvement without indexation – Any improvement expenditure made must be considered, you can enter the amount here. No indexation benefit is permitted too.
- (biii) Expenditure wholly and exclusively in connection with transfer – Expenditure made in transfer or execution of deal like (advertisement, brokerage).
Subsection (d) in case of security/unit loss to be disallowed u/s 94(7) or 94(8), the brief explanation is below in the article.
Finally~
You will get the summarised data under ‘E‘, Here’s a very easy explanation to understand the summarised data.
In the above example, short term capital loss and Short term capital gain both value are fetched from the main data. In the above scenario, there is a loss remaining after set off.
Set off and Carry forward of losses under Capital Gains
Capital loss causes due if the cost of acquisition is higher then the sale receipts from a Capital Asset. Capital gain is always taxable depending upon the class of assets and as per applicable rate as per tax slab.
In the case of Capital loss income tax department not allow the taxpayer to set off the capital loss with any other class of income.
For instance: If your income from salary after all deduction comes out to be INR 650000, on the other hand, Capital loss is INR 500000 from the sale of house property, the loss will not be adjusted from other classes, you have to pay the tax according to your slab.
Long Term Capital Loss can be set off only against Long Term Capital Gains. Short Term Capital Losses are allowed to be set off against both Long Term Gains and Short Term Gains.
The income tax department also permits you to carry forward your capital loss for the next ‘8 assessment years’.
How to set off and carry forward capital loss in ITR2 form
Income tax department provided a separate form “Form CFL” in ITR2 which allows you to enter your set off and carry forwarded capital loss for the previous 8 years.
All the information given in the table is very transparent to understand and very easy to fill.
How to fill Information about accrual/receipt of capital gain in ITR2
Information about accrual/receipt of capital gain table ‘F’ required to fill by the taxpayer, the purpose of this section is to disclose the amount in the particular date slot.
- Up to 15th June
- 16th June to 15th Sep
- 16th Sep to 15th December
- 16th Dec to 15th March
- 16th March to 31st March
Basically you have to enter the amount received under particular criteria on that date slot.
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