Under-25 investors lead in market losses, complex tax filings jump to 82%
Young Indians are increasingly entering the stock market early in their financial lives, but the experience is not always translating into profits. More than one in three investors under the age of 25 who reported capital gains or losses incurred losses in assessment year (AY) 2026-27, the highest proportion across all age groups, according to ClearTax’s annual report, ‘How India Filed in 2026’.
The share of young investors reporting capital losses stood at 37%, compared with 29% among those aged 25-30. The proportion declined progressively with age, falling to 26% among investors aged 30-35, 26% in the 35-40 age group, 25% among those aged 40-50, 24% in the 50-60 category and 21% among taxpayers above 60.
The findings point to a growing appetite among younger Indians for market-linked investments and trading, even as a significant proportion are experiencing losses in the process.
The trend also suggests that early market participation is bringing a new generation of investors into the tax system, with increasingly complex income profiles that include capital gains, business income and independent professional earnings.
Among self-filers under 25 who reported capital gains or losses in AY 2026-27, 37% reported a loss, the highest of any age group, falling steadily with age to 21% among those above 60.
Young investors are not backing away
Despite the higher incidence of losses, young investors appear to be deepening their engagement with financial markets.
Among first-time taxpayers below 25 opting for ClearTax’s expert-assisted filing plans, 82% filed complex income tax returns in AY 2026-27, compared with 68% in AY 2024-25. The share had risen to 76% in AY 2025-26.
More significantly, the proportion filing ITR-3, which is used by individuals reporting income from business or profession, increased from 18% in AY 2024-25 to 34% in AY 2026-27.
The report suggests that early investment losses are not necessarily discouraging younger participants. Instead, they are increasingly engaging with the formal tax system and seeking assistance in reporting market-related income and losses.
Freelancing and trading reshape young Indians’ income profiles
The growing complexity of tax returns among younger taxpayers is also linked to the emergence of alternative income streams.
According to ClearTax, under-25 taxpayers were the only age group to register significant growth in the use of ITR-4, a return form used by eligible taxpayers opting for the presumptive taxation scheme.
The share of ITR-4 filings among this age group increased from 8.9% in AY 2024-25 to 15.2% in AY 2026-27, a rise of 6.3 percentage points.
The report attributes this trend to younger individuals increasingly pursuing freelancing, consulting and small digital ventures instead of relying exclusively on traditional salaried employment.
The shift is also visible in the broader tax-filing data. The share of ITR-3 filings across ClearTax users increased to 28.4% in AY 2026-27 from 20.6% in AY 2025-26, a rise of 7.8 percentage points. It nearly caught up with ITR-2 filings, which accounted for 28.8%.
Lower-income investors report higher losses
The incidence of investment losses is not restricted to younger taxpayers. The report also found that taxpayers in lower income brackets were more likely to report capital losses.
Among those reporting gross income below Rs 1 lakh, 35% reported a capital loss in AY 2026-27. The proportion declined to 19% among taxpayers earning above Rs 50 lakh.
In fact, complex tax filings are becoming increasingly common among middle-income taxpayers. Nearly half of those reporting gross income between Rs 5 lakh and Rs 10 lakh filed complex returns, including ITR-2, ITR-3 and ITR-4, in AY 2026-27.
Their share rose to 49.6% from 36.2% in the previous assessment year, an increase of 13.4 percentage points.
“India’s relationship with money is evolving. We are moving beyond an economy where financial security was largely defined by a monthly salary towards one where individuals are increasingly taking ownership of how they build and grow their wealth. From young professionals participating in equity markets and taking up independent work to households diversifying their investments, wealth creation is becoming a more active and widespread pursuit. Our data reflects this shift, with a growing number of taxpayers reporting multiple income streams and more complex financial portfolios. As this trend gathers momentum, access to the right financial and tax guidance will become increasingly important to help individuals make informed decisions and manage their wealth responsibly,” said Archit Gupta, Founder & CEO, ClearTax.