NEW DELHI: Good news for salaried tax payers! The government has made tax filing easier for those earning up to Rs 1.25 lakh through long-term capital gains from equities or equity mutual funds. Earlier, salaried individuals with income from capital gains were required to file Form ITR-2 even where the capital gains were non-taxable.
From this year, the new Form ITR-1 has a small section for reporting long-term capital gains on which tax is not payable. Currently, ITR 1 is filed by individuals with income up to Rs 50 lakh from salary, one house property, interest and agriculture income. However, if they made capital gains in a particular year, they had to file ITR-2.
To ease the compliance burden, the tax department has exempted salaried individuals with long-term capital gains up to Rs 1.25 lakh annually from filing ITR 2 form.
It must be noted that the government enhanced the threshold for tax-free long-term capital gains from Rs 1 lakh to Rs 1.25 lakh in the Budget this year.
However, the tax rate on long-term capital gains has been increased from 10% to 12.5%.
“This change streamlines the tax filing process, making it more accessible and less burdensome for small investors and salaried individuals, encouraging timely compliance,” says Sandeep Sehgal, partner, tax, AKM Global.
However, if a taxpayer earns long-term capital gains in excess of Rs 1,25,000 or any other long term capital gains other than equities or units of business trust or earns short-term capital gains or has carried forward or brought forward capital losses or derived income, the salaried individual would have to fill Form ITR-2 for filing return of income.
There is a similar change in the ITR-4, which applies to tax payers resorting to presumptive taxation for their business income.