Which ITR do you file if you have capital gains — ITR-1, ITR-2 or ITR-3?

The quick rule

• Any capital gains (shares, mutual funds, property, gold) → ITR-2.
• Only long-term equity/equity-MF gains up to ₹1.25 lakh (Section 198, old 112A), with no capital loss to carry forward → ITR-1 is now allowed (a recent relaxation).
• Short-term equity gains, property gains, or gains above ₹1.25 lakh, or any capital loss to carry forward → ITR-2.
• If your trading is a business (F&O, intraday, very frequent trading) → ITR-3.

"I sold shares within a month" (short-term)

A profit on shares held under 12 months is short-term capital gain (Section 196, old 111A, taxed at 20%) — ITR-1 can't report it, so you file ITR-2.

"I have both short-term and long-term gains"

File ITR-2 — it has the schedule for every kind of capital gain, and lets you set off and carry forward losses (which ITR-1 cannot).

"Salaried, and I trade stocks, mutual funds and bonds"

• Delivery-based investing (you buy and hold) → gains are capital gains → ITR-2, alongside your salary.
• F&O or intraday → that's business income → ITR-3 (you can still show your delivery investments as capital gains in the same ITR-3).
• Report each correctly: capital gains under the CG schedule, business/F&O under the business schedule.

Why it matters

Filing ITR-1 when you had capital gains makes the return defective (a 139(9) notice). Pick the right form the first time. Rates: capital-gains reckoner.