How to File ITR-2 for AY 2027-28: For Capital Gains and Multiple Properties

ITR-1 ended for you the moment you sold equity mutual funds with more than ₹1.25 lakh of LTCG, or bought your third house, or held even one share in a foreign company. The forms aren''t graded by complexity for the fun of it — they''re graded by the structural complexity of the income they report. ITR-2 is the form for individuals and HUFs whose income gets too elaborate for ITR-1 but doesn''t cross into business or professional income (which would push you to ITR-3 or ITR-4).

The form has around 25 distinct schedules. Almost no taxpayer touches all of them. What matters is identifying which schedules apply to your specific situation and filling those carefully — most of the procedural pain in ITR-2 comes from a small number of schedules where the requirements are unusually detailed. This article walks through the filing flow with focus on the schedules that actually matter for the typical ITR-2 filer: capital gains, multiple house properties, and foreign assets. Use Ganak''s Capital Gains Calculator alongside this article to verify your gain computations before entering them into Schedule CG.

Who Actually Needs to File ITR-2

The trigger conditions are specific. You must file ITR-2 (instead of ITR-1) if any one of the following applies for FY 2026-27:

• Capital gains above ITR-1 limits — any LTCG under Section 112A exceeding ₹1.25 lakh, any STCG under Section 111A, or any capital gains from property, gold, debt funds, unlisted shares, or foreign securities
• Income from more than two house properties — ITR-1 allowed one until AY 2025-26, expanded to two from AY 2026-27. Three or more means ITR-2
• Foreign assets or foreign income — bank accounts abroad, foreign shares (including stocks bought through fractional ownership platforms), foreign mutual funds, even an inactive bank account from your earlier time abroad
• Director of a company at any time during the year, even unpaid directorships in family businesses or startups
• Unlisted equity holdings at any time during the year, including pre-IPO shares from your employer''s ESOP and equity in private companies
• Status of RNOR or non-resident for tax purposes during FY 2026-27
• Total income above ₹50 lakh — triggers mandatory Schedule AL (Assets and Liabilities) reporting
• Agricultural income exceeding ₹5,000 (used only for rate calculation, not taxed, but disqualifies ITR-1)

If you have any income from business or profession — including consultancy retainers, freelance income reported under Section 194J, or any presumptive income — you cannot use ITR-2 and must use ITR-3 or ITR-4 instead. ITR-2 is specifically for non-business income.

What to Prepare Before Filing

ITR-2 is meaningfully more document-heavy than ITR-1. The portal pre-fills a lot, but you''ll need to verify and supplement. Gather these in advance:

• Form 16 from each employer (or Form 130 from FY 2026-27 onwards under the new Act framework)
• Capital gains statement from every broker, mutual fund house, and demat account — the consolidated CG statement from CAMS, KFintech, or your broker is the most useful document
• Property documents if reporting house property income — sale deeds, municipal tax receipts, home loan interest certificates
• Foreign asset details — bank statements, brokerage statements for foreign holdings, FMV as of 31 December of the calendar year (or last business day before)
• AIS and Form 26AS downloaded from the e-filing portal — for cross-checking against your numbers
• Dividend statements from companies and mutual funds
• Interest certificates from banks for FD and savings interest
• Rent receipts and lease agreements if claiming HRA under the old regime or reporting rental income

For Schedule 112A, request your broker for the capital gains statement in Excel rather than PDF. Most brokers — Zerodha, Groww, ICICIDirect, HDFC Securities — provide Excel exports that can be uploaded directly into the e-filing portal. Manual entry of 50+ scrips from a PDF is the largest source of avoidable errors in ITR-2 filing.

The Filing Flow Step by Step

Once you''re ready, the actual sequence on the e-filing portal is straightforward. Six high-level steps:

1. Log in at incometax.gov.in, navigate to e-File → Income Tax Returns → File Income Tax Return. Select Assessment Year 2027-28, filing type Original, status Individual (or HUF), and form ITR-2.
2. Verify Personal Information — name, address, Aadhaar, contact details, residential status. Choose your tax regime (new is default; old requires explicit election). Confirm bank account details for refund.
3. Enter income under each applicable head — Salary (auto-populated from Form 16), House Property (Schedule HP), Capital Gains (Schedule CG and sub-schedules), Other Sources. Cross-check auto-populated figures against your documents before accepting them.
4. Fill the supplementary schedules — Schedule FA (foreign assets), Schedule AL (if income exceeds ₹50 lakh), Schedule VDA (cryptocurrency transactions), Schedule 80G (donations), as applicable. Skip the schedules that don''t apply to you — leaving them empty is correct.
5. Review tax computation — Schedule CYLA (current year loss adjustment), Schedule BFLA (brought forward losses), Schedule CFL (losses carried forward). The portal auto-applies these from your earlier entries. Verify the final tax figure against your own calculation.
6. Pay any balance tax through Challan ITNS-280 if there''s a shortfall after TDS and advance tax. Submit the return and e-verify within 30 days using Aadhaar OTP, net banking, or bank EVC.

The portal walks you through each schedule sequentially, but you don''t have to follow that exact order. Most experienced filers tackle Schedule CG first (it''s the most complex), then HP, then FA, then the smaller schedules, and finally the income summary which auto-populates from the others.

Schedule CG: Capital Gains in Detail

This is where most ITR-2 filers spend the bulk of their effort. Schedule CG is divided into sub-schedules for each type of capital asset, with specific computation requirements for each.

Schedule 111A: STCG on listed equity (STT-paid). Aggregate figures suffice — total sale consideration, total cost of acquisition, and resulting STCG. The tax rate is 20% (raised from 15% by Budget 2024, effective 23 July 2024 onwards). The 23 July 2024 date split that existed in AY 2025-26 forms has been removed for AY 2026-27 and onwards, since transactions in those years are all post-cutoff.

Schedule 112A: LTCG on listed equity (STT-paid). This is the most procedurally demanding sub-schedule. For shares or equity mutual funds purchased before 1 February 2018 and sold during the year, scrip-wise reporting is mandatory — you must enter ISIN, scrip name, units sold, sale consideration, cost of acquisition, and Fair Market Value (FMV) as of 31 January 2018 for each scrip. The grandfathering rule under Section 112A allows you to use the higher of actual cost or FMV on 31 January 2018 as your cost basis, which can substantially reduce taxable gain for older holdings.

For shares purchased on or after 1 February 2018, scrip-wise reporting is not required — aggregate figures suffice. This is a critical distinction. If all your equity sales during FY 2026-27 were from post-2018 purchases, you can report aggregate numbers and skip the scrip-wise grind. If any holding pre-dates February 2018, that specific portion needs scrip-wise treatment.

The LTCG tax rate is 12.5% above the ₹1.25 lakh annual exemption (raised from 10% above ₹1 lakh by Budget 2024). The exemption is applied automatically by the portal based on your total Section 112A gains across the year.

Schedule 112: LTCG on other assets. Property, gold, unlisted shares, debt mutual funds bought before April 2023, foreign securities. The tax rate is 12.5% without indexation for assets acquired after 23 July 2024. For property bought before that date, resident individuals and HUFs can choose between 12.5% without indexation or 20% with indexation — pick whichever produces lower tax. The form provides both computation paths; enter your figures into both and the portal will use the lower outcome automatically.

For property, you''ll also enter the deductions under Section 54, 54F, or 54EC if claiming reinvestment exemptions. The Cost Inflation Index for FY 2025-26 is 376 (CBDT Notification 70/2025); for FY 2026-27, CBDT will notify the new CII typically in May-June 2026.

Schedule VDA: Virtual Digital Asset transactions. Mandatory for any cryptocurrency or NFT sales. Transaction-by-transaction reporting — date of acquisition, date of transfer, cost of acquisition, sale consideration, resulting income at 30% under Section 115BBH. The portal cross-checks against Form 26AS entries from the 1% TDS deducted by Indian exchanges, which means under-reporting is straightforward to detect.

Schedule HP: Multiple House Properties

If you own more than one house property, Schedule HP handles all of them. For each property, the form asks for address, type (self-occupied, let-out, or deemed let-out), and income computation.

Self-occupied property (SOP): Income is treated as nil. You can claim home loan interest up to ₹2 lakh under Section 24(b) in the old regime (no equivalent in the new regime). Individuals can claim up to two properties as self-occupied from FY 2024-25 onwards — earlier the limit was one. If you own three or more residential properties, you must designate two as SOP and the rest as deemed let-out.

Let-out property: Income computation runs as gross annual rent minus municipal tax paid minus 30% standard deduction (under Section 24(a)) minus interest paid on home loan. There''s no cap on home loan interest for let-out property — the full interest is deductible, even if it creates a loss. Such losses (called "loss from house property") can be set off against other heads up to ₹2 lakh per year; the balance is carried forward for 8 years.

Deemed let-out property: Any property beyond the two SOP allowance, even if actually vacant, is treated as deemed let-out. Notional rent is calculated based on similar properties in the locality, and tax is computed as if you''re actually receiving that rent. This is the rule that catches second-home owners by surprise — leaving a property vacant doesn''t avoid tax; it just means you pay tax on imputed income with no actual cash inflow to fund it.

One useful practical note: if you''ve let out property and the tenant''s monthly rent exceeds ₹50,000, the tenant is required under Section 194-IB to deduct 5% TDS at the time of final rent payment in March (or when vacating). Most tenants don''t know this; if your tenant didn''t deduct TDS on rent above ₹50,000/month, you''re responsible for paying the corresponding advance tax yourself.

Schedule FA: Foreign Assets — Where Penalties Get Severe

Schedule FA is the most consequential schedule in ITR-2 in terms of penalty risk. Resident and Ordinarily Resident (ROR) taxpayers must disclose every foreign asset held at any time during the calendar year, regardless of value. The list of disclosable foreign assets is comprehensive:

• Foreign bank accounts — including dormant accounts from past stints abroad, accounts maintained for online subscriptions, even joint accounts where you''re a secondary holder
• Foreign shares and securities — direct equity holdings, ETFs, mutual funds bought through platforms like INDmoney, Vested, or Stockal that hold US securities for Indian investors
• Foreign property — real estate, including timeshares
• Foreign trusts where you''re a settlor, beneficiary, or trustee
• Cash value of insurance and annuity contracts from foreign insurers
• Beneficial ownership of foreign entities — including private company shareholdings overseas
• Authority over foreign accounts — even signing authority on someone else''s account counts

The penalty for non-disclosure is up to ₹10 lakh under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015 — applied per year of non-disclosure, not as a one-time fine. Continued non-disclosure can attract prosecution with imprisonment up to seven years. This is one of the harshest penalty regimes in Indian tax law, and the IT department actively pursues cases through CARF (Crypto Asset Reporting Framework) data exchanges with OECD member countries.

The reporting period is the calendar year, not the financial year. While filing for AY 2027-28 (FY 2026-27), Schedule FA covers assets held between 1 January 2026 and 31 December 2026. The FMV reported is typically the value on 31 December 2026 (or the last business day of that year), converted to INR at the SBI TT buying rate on that date.

Budget 2026 introduced a one-time six-month disclosure scheme for small taxpayers with foreign assets under ₹20 lakh — providing immunity from prosecution for past non-disclosure of non-immovable foreign assets below that threshold, subject to specified conditions. If you have undisclosed foreign assets below ₹20 lakh, this window may be your last opportunity to come clean without penal consequences. Consult a CA before deciding.

Schedule AL: Assets and Liabilities Above ₹50 Lakh

If your total income for FY 2026-27 exceeds ₹50 lakh, Schedule AL becomes mandatory. The schedule asks for the cost (not FMV) of your major assets and liabilities as of 31 March 2027:

• Immovable property — residential land and buildings with cost and address
• Movable assets — jewellery, art, vehicles (only if cost exceeds specified thresholds)
• Financial assets — bank balances, FDs, shares, mutual funds, bonds, insurance with surrender value, NPS balance
• Cash in hand
• Liabilities — home loans, personal loans, credit card outstanding, business liabilities

The schedule isn''t about taxing your assets — it''s about disclosure. The IT department uses Schedule AL to flag inconsistencies between declared income and accumulated wealth over time. If a taxpayer reports ₹60 lakh of annual income but declares ₹15 crore of assets, the system flags it for verification. Honest disclosure is materially safer than under-reporting; the assets are not taxable, only their existence is being recorded.

The Section 87A Trap for ITR-2 Filers

This is the trap that catches small investors most often. Section 87A rebate of ₹60,000 (new regime) or ₹12,500 (old regime) applies only to tax computed on income taxed at slab rates. It does not apply to capital gains under Section 111A or 112A, or to cryptocurrency gains under Section 115BBH.

Worked example. Anjali has a salary of ₹10 lakh and equity LTCG of ₹3 lakh during FY 2026-27. She files ITR-2 because the LTCG amount triggers it.

• Tax on salary (new regime, after ₹75,000 standard deduction): taxable income ₹9.25 lakh, tax computed under slabs ₹47,500. Section 87A rebate covers this fully — tax on salary portion is zero.
• Tax on LTCG: ₹3 lakh less ₹1.25 lakh exemption = ₹1.75 lakh × 12.5% = ₹21,875. Plus 4% cess = ₹22,750. This is not covered by Section 87A.

Anjali''s total tax for FY 2026-27 is ₹22,750 despite her total income being only ₹13 lakh. The "₹12 lakh tax-free" headline doesn''t apply because the rebate has structural limits. ITR-2 filers with significant capital gains routinely owe tax even when their slab-rate income is below the rebate threshold — the form computes the two separately and adds them.

Verify, Submit, and E-Verify Within 30 Days

Before final submission, run through the verification checklist:

• Cross-check salary against Form 16 / Form 26AS
• Cross-check capital gains against the AIS line items
• Confirm bank account is pre-validated for refund credit
• Verify tax regime selected matches your intended choice
• Confirm Schedule FA is complete if you''re ROR with any foreign asset
• Confirm Schedule AL is complete if income exceeds ₹50 lakh

Submit the return and immediately e-verify within 30 days. Aadhaar OTP is fastest. Net banking through one of the listed banks works too. The physical alternative — printing ITR-V and mailing to CPC Bengaluru — is allowed but adds 2-3 weeks to processing time. An unverified return is treated as never filed, so missing the 30-day window means re-filing from scratch.

After verification, expect refund credit within 30-90 days if your return shows a refund. If you owe additional tax, pay through Challan ITNS-280 before submission to avoid Section 234A interest accruing from 1 August 2027 onwards.

Frequently Asked Questions

Who is required to file ITR-2 for AY 2027-28?

Individuals and HUFs whose income includes capital gains exceeding ITR-1 limits (any STCG, or LTCG above ₹1.25 lakh), more than two house properties, foreign assets or foreign income, RNOR/NRI status, directorship of a company, unlisted equity holdings, agricultural income above ₹5,000, or total income above ₹50 lakh. ITR-2 cannot be used if you have any business or professional income — that pushes you to ITR-3 or ITR-4.

What is the deadline for filing ITR-2 for AY 2027-28?

31 July 2027 for income earned during FY 2026-27. A belated return can be filed until 31 December 2027 with a Section 428(b) fee of ₹1,000 (income up to ₹5 lakh) or ₹5,000 (above ₹5 lakh). Interest under Section 234A, 234B, and 234C applies on any unpaid tax. The revised return window extends to 31 March 2028 — 12 months from the end of the tax year, an improvement over the old 9-month rule.

Is scrip-wise reporting mandatory in Schedule 112A?

Only for shares or equity mutual fund units purchased before 1 February 2018 and sold during the assessment year — the grandfathering provision under Section 112A. For these, you must report ISIN, scrip name, units, sale consideration, cost of acquisition, and Fair Market Value as of 31 January 2018 for each scrip. For shares acquired on or after 1 February 2018, aggregate reporting is sufficient — no scrip-wise breakdown needed. Use Excel exports from your broker to upload directly into the portal rather than manual entry.

What happens if I don''t disclose foreign assets in Schedule FA?

Penalty of up to ₹10 lakh per year of non-disclosure under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015, applied for each year you held undisclosed assets. Continued non-disclosure can attract prosecution with imprisonment up to seven years. The IT department actively pursues these cases using OECD data exchanges under CARF (Crypto Asset Reporting Framework) and Automatic Exchange of Information agreements. Disclosure is required for any foreign asset held at any time during the calendar year, regardless of value. Budget 2026 introduced a one-time six-month disclosure scheme for foreign assets below ₹20 lakh.

Can I claim Section 87A rebate on capital gains?

No. Section 87A rebate of ₹60,000 (new regime) or ₹12,500 (old regime) applies only to tax computed on slab-rate income — salary, interest, rental, etc. Capital gains taxed at special rates under Section 111A (STCG, 20%), Section 112A (LTCG on equity, 12.5% above ₹1.25 lakh), Section 112 (LTCG on property/gold/unlisted), and Section 115BBH (crypto, 30%) are excluded from the rebate. ITR-2 filers with significant capital gains can owe substantial tax even when their slab-rate income is below the ₹12 lakh rebate threshold.

Can I switch to the old tax regime in ITR-2?

Yes, for salaried taxpayers with no business income. Tick the "old regime" option directly in the ITR — no separate Form 10-IEA filing required. The new regime applies by default if you don''t actively elect old regime. Old regime makes sense if you have substantial HRA, home loan interest under Section 24(b) for self-occupied property, 80C investments, and other Chapter VI-A deductions totalling more than ₹5-7 lakh, depending on your income level. Run both regimes through Ganak''s calculators before deciding.

What if I made losses on capital gains during the year?

Capital losses are reported in Schedule CG with the same scrip-wise detail required for gains. Short-term capital losses can offset both STCG and LTCG. Long-term capital losses can offset only LTCG, not STCG or other income heads. Unused losses are carried forward for up to 8 assessment years through Schedule CFL. Critical requirement: you must file your ITR by the original due date (31 July 2027) to retain the carry-forward right — filing belated after this date forfeits future loss set-off entirely. This is one of the meanest provisions in the Act.

Sources and Further Reading

This guide is based on the Income Tax Act, 2025 framework (effective 1 April 2026, governing FY 2026-27 income filed in AY 2027-28) and the corresponding provisions of the 1961 Act. The ITR-2 form specifications for AY 2027-28 will be notified by CBDT before April 2027. For official references:

• Income Tax Department — How to File ITR-2 Official Manual
• Income Tax e-Filing Portal — ITR-2 filing and Schedule CG entry
• Salaried Individuals Return Filing Guide — Income Tax Department
• Income Tax India — Schedule FA and Black Money Act provisions

Last verified: 14 May 2026. This article will be updated when CBDT notifies the ITR-2 form for AY 2027-28, expected by March 2027.