New SFT-2517 and SFT-2518 reporting rules will use depository and mutual fund data to populate investors’ capital gains details in the Annual Information Statement, including FIFO matching , but nil-cost entries and other exceptions will still require manual checks.
India’s income-tax system is set to take over much of the drudgery that has long accompanied capital gains reporting. For assessment year 2027-28, investors with demat holdings and mutual fund units may find that a large part of their capital gains schedule is already waiting for them in the Annual Information Statement, thanks to two September 2026 notifications issued by the Directorate of Income Tax (Systems). The Hindu BusinessLine reported that the new framework shifts the heavy lifting for many retail investors away from annual spreadsheet work and on to depositories and mutual fund transfer agents.
The change centres on two new Statements of Financial Transactions: SFT-2517 for depository accounts and SFT-2518 for mutual fund transfers. According to the notifications summarised by Figment Global and other tax specialists, depositories such as NSDL and CDSL must report user-initiated debits, while registrar and share transfer agents must report mutual fund unit transfers. The information is intended to feed directly into taxpayers’ AIS and, from there, into return forms, with the first reports due by 31 October 2026, according to Figment Global.
A key feature of the new system is that it applies first-in, first-out matching automatically. That means the earliest available purchase is matched against the earliest sale, a method already familiar to tax advisers but now embedded in the reporting architecture. The Hindu BusinessLine illustrated the point with a simple example in which shares bought in 2023 and again in 2026 are matched against a 2026 sale, with the older purchase treated as the one disposed of first. The same approach also determines whether gains are short term or long term, and it helps the system compute the cost of acquisition in a more consistent way.
The reporting rules go further than simple trade matching. For securities bought before 1 February 2018, the system can draw on the relevant end-of-day price to help with the grandfathering calculation that applies to older equity holdings and equity-oriented funds. The Hindu BusinessLine said the AIS will also populate indexed cost in applicable cases, while the taxpayer can still adjust the reported sale value or cost before filing if the figures are wrong. But the convenience has limits: off-market transactions, gifts, inherited shares, ESOP vesting, certain corporate actions and other non-exchange transfers may appear with nil cost in the system, meaning investors still need to replace those placeholders with the correct numbers.
That residual responsibility matters. The new framework gives the tax department a clearer line of sight over transactions that previously had to be pieced together manually, including holdings spread across several brokers and multiple demat accounts linked to one PAN. It also narrows the scope for mismatches between the taxpayer’s own calculations and the department’s data. As The Hindu BusinessLine noted, the upside is convenience, but the risk is complacency: accepting a pre-filled return without checking nil-cost entries could lead to overpayment, while ignoring the department’s figures could invite an intimation later. The result is a quieter filing season for many investors, but not a hands-off one.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
