The Rise of the Salaried Investor
More salaried professionals in India are actively investing in equity markets and mutual funds than ever before. This wealth-creation journey, however, comes with important tax compliance responsibilities. While your salary income is neatly detailed in your Form
16, the profits you make from selling stocks or mutual fund units, known as capital gains, require separate and careful reporting in your Income Tax Return (ITR). Forgetting this step or getting it wrong is one of the most common reasons salaried individuals receive notices from the Income Tax Department. The department receives data on all your transactions from brokers and exchanges, making any mismatch easy to flag.
Understanding Long-Term Capital Gains (LTCG)
When you sell a capital asset, the profit is a capital gain. For listed stocks and equity mutual funds, the holding period determines the tax treatment. If you sell an asset after holding it for more than 12 months, the profit is a Long-Term Capital Gain (LTCG). For the current filing season (AY 2026-27), LTCG from equities above a threshold of ₹1.25 lakh is taxed at 12.5%. Gains below this limit are exempt, but they must still be reported in your ITR. If you sell within 12 months, it's a Short-Term Capital Gain (STCG), which is taxed differently.
The Pre-Filled ITR and AIS Trap
The income tax portal now offers pre-filled ITR forms, which automatically populate details from various sources, including your Annual Information Statement (AIS). The AIS is a comprehensive record of your financial transactions reported by banks, brokers, and mutual fund houses. While convenient, relying solely on this pre-filled data for capital gains is a significant mistake. The AIS often shows the sale value of your investments correctly, but it may not accurately capture the purchase price (cost of acquisition), especially for older investments or in cases of corporate actions like bonuses or splits. This leads to an incorrect calculation of your actual profit, which can result in you overpaying tax or underpaying it, both of which are problematic.
Your Essential LTCG Filing Check: AIS vs. Broker Statement
This is the non-negotiable check every salaried investor must perform. Treat your broker's capital gains statement as the primary source of truth and the AIS as a verification tool. Follow these steps: 1. Download your capital gains statement for the financial year from all your brokerage accounts (e.g., Zerodha, Groww, etc.). 2. Log in to the Income Tax e-filing portal and download your AIS. 3. Go to the section in the AIS detailing the sale of securities. 4. Methodically compare each sale transaction listed in your AIS with the data in your broker statement. Pay close attention to the cost of acquisition. The broker statement is more likely to have the correct purchase price, applying the First-In, First-Out (FIFO) method correctly. The AIS may have incomplete or estimated data.
How to Correct Discrepancies in Your ITR
If you find a mismatch between the AIS and your broker statement, always use the figures from your broker's statement to file your ITR. You must manually enter the correct details in 'Schedule Capital Gains' (Schedule CG) and 'Schedule 112A' for long-term gains. Do not accept the pre-filled data if it is incorrect. While you can submit feedback on the AIS portal to correct the information for the department's records, your immediate priority is to file the ITR with the accurate data. For a salaried investor with capital gains, the correct form is typically ITR-2. Using the wrong form, like ITR-1 (unless your LTCG is under the ₹1.25 lakh limit with no losses), can lead to a defective return.
Why This Check Is Non-Negotiable
Skipping this reconciliation can have serious consequences. If you under-report your gains and pay less tax, you are liable to receive a notice from the tax department, potentially leading to penalties and interest on the tax due. Conversely, if the AIS data shows a lower purchase cost than reality, you could end up overpaying your taxes. Taking an hour to cross-verify these statements ensures your tax filing is accurate, compliant, and saves you from future headaches and financial loss. It also ensures you can correctly carry forward any capital losses to offset future gains, a benefit you lose if you file a belated return.
