ITR Filing: The tax season has officially started now with the Income Tax Department recently notifying the Income Tax Return (ITR) forms for AY 2026-27 for ITR filing. Salaried and individual taxpayers are required to file their ITRs by 31 July 2026, for AY 2026-27.
Salaried taxpayers will be able to file their taxes once they receive their Form 16 by 15 June 2026. As we enter the ITR filing season, it is important to know that the tax laws of India still allow you to claim deductions against capital gains.
Using these deductions, taxpayers can effectively reduce the tax they pay to the government. Certain deductions can also be claimed under various sections of the Income Tax Act for capital gains incurred by the taxpayer. However, it should be noted that these deductions are subject to strict terms and conditions.
What are the tax deductions allowed against capital gains?
- Deduction under Section 48 (i): Section 48(i) of the Income Tax Act allows a deduction against any expenditure incurred exclusively and wholly linked to the transfer of capital assets.
- Deduction under Section 48(ii): Deduction under this section is allowed against acquiring a long-term capital asset and any improvement on it, including the indexed costs of acquisition as well as improvement.
- Deduction under Section 54: This deduction is allowed when an individual or HUF claims exemptions on long-term capital gains (LTCG) from selling a residential house and reinvesting the gains for purchasing or constructing a new residential house. However, there are certain limitations.
- Deduction under Section 54B: Exemptions are allowed when capital gains from the transfer of agricultural land are used by an individual, their parents or by an HUF for reinvestment in other land for agricultural purposes. This is also subject to some conditions.
- Deduction under Section 54D: This is done when capital gains on compulsory acquisition of land are used to purchase or construct other land.
- Deduction under Section 54EC: This deduction is allowed when the long-term capital gain incurred by transferring a land or a building is reinvested for the purchase of bonds of NHAI, REC, or any other notified bond.
- Deduction under Section 54EE: Section 54EE of the Income Tax Act, 1961, provides exemptions on long-term capital gains (LTCG) invested in notified units of specified funds. Taxpayers can claim an exemption of up to ₹50 lakh within 6 months of transfer
- Deduction under Section 54F: Under this section, taxpayers can claim deductions if the net consideration on transfer of a long-term capital asset, other than a residential house, is reinvested in a residential house. However, there are certain terms and conditions related to this section.
- Deduction under Section 54GB: Section 54GB of the Income Tax Act provides an exemption of capital gains arising out of the sale of residential property on investing the same in shares of a startup company or an eligible company. Taxpayers are required to make this investment before the due date for ITR filing, and the company/startup must use the invested amount to purchase specified new assets within 1 year from the date of subscription.
- Salaried taxpayers must file ITR by July 31, 2026, and can start after receiving Form 16 by June 15, 2026.
- The Income Tax Act provides specific deductions to help reduce capital gains tax, but they come with strict terms and conditions.
- Being informed about available deductions can significantly enhance tax savings and financial planning.
