Capital Gains Tax in India: STCG, LTCG, and How to Calculate What You Owe
Sold shares, mutual funds, or property? The tax you owe depends on how long you held them — and the rules changed again in Budget 2024.
When you sell a capital asset — shares, mutual funds, property, gold, or bonds — the profit you make is called a capital gain, and it is taxable in India. The tax rate depends on two things: the type of asset and how long you held it. The Union Budget 2024 revised these rates significantly, making it essential to know the updated rules for FY 2025-26.
Short-Term vs Long-Term: The Holding Period
The holding period that separates short-term from long-term differs by asset class:
| Asset Type | Short-Term (STCG) if held ≤ | Long-Term (LTCG) if held > |
|---|---|---|
| Listed equity shares / equity mutual funds | 12 months | 12 months |
| Debt mutual funds | 24 months | 24 months |
| Immovable property (land, house) | 24 months | 24 months |
| Unlisted shares | 24 months | 24 months |
| Gold / jewellery | 24 months | 24 months |
| Bonds (listed) | 12 months | 12 months |
Capital Gains Tax Rates for FY 2025-26
| Asset | STCG Rate | LTCG Rate | Exemption |
|---|---|---|---|
| Listed equity / equity MF | 20% (post-Budget 2024) | 12.5% | First ₹1.25 lakh LTCG tax-free |
| Debt MF (acquired after Apr 2023) | Slab rate | Slab rate | None |
| Immovable property | Slab rate | 12.5% (no indexation) | Section 54 exemption |
| Gold | Slab rate | 12.5% (no indexation) | None |
| Unlisted shares | Slab rate | 12.5% | None |
Important: Budget 2024 removed the indexation benefit for LTCG on property and gold while simultaneously reducing the LTCG rate to 12.5%. Sellers of inherited or old property must now compare both routes (12.5% without indexation vs the old 20% with indexation) — the old regime may not apply for sales after 23 July 2024.
Calculating LTCG on Equity: A Worked Example
Purchase: 500 shares of Company X at ₹200 each in March 2023
Cost of acquisition: ₹1,00,000
Sale: 500 shares at ₹350 each in May 2025
Sale proceeds: ₹1,75,000
LTCG = ₹1,75,000 – ₹1,00,000 = ₹75,000
Exemption: First ₹1,25,000 of LTCG is tax-free per year.
₹75,000 < ₹1,25,000 → Tax payable = ₹0
If the same investor also booked ₹80,000 LTCG on an equity mutual fund in the same year, total LTCG = ₹1,55,000. Tax = (₹1,55,000 – ₹1,25,000) × 12.5% = ₹3,750.
Section 54: The Property Capital Gains Exemption
If you sell a residential house and reinvest the proceeds in another residential property within 2 years (or construct within 3 years), you can claim exemption under Section 54. The capital gains amount must be reinvested — not the full sale proceeds. For plots and commercial property sold with LTCG, Section 54EC bonds (NHAI, REC) allow you to invest up to ₹50 lakh within 6 months to claim full exemption.
Tax Loss Harvesting
Short-term capital losses can offset short-term capital gains. Long-term capital losses (post-Budget 2024, now taxable) can offset long-term capital gains. Unused losses can be carried forward for 8 assessment years, but you must file your ITR on time (by 31 July for individuals) to carry them forward.
How to Report Capital Gains in Your ITR
Capital gains must be reported in ITR-2 (or ITR-3 for business income). Your broker generates a capital gains statement (available on CDSL/NSDL or broker platforms like Zerodha Console or HDFC Securities) that breaks down all transactions. Use this to populate Schedule CG in your return.
Use the Income Tax Calculator to factor in your capital gains alongside salary income for a complete tax picture.
These figures are estimates for educational purposes. Consult a SEBI-registered advisor for personalised advice.
Frequently asked questions
What is the LTCG tax rate on equity mutual funds in India for FY 2025-26?+
Long-term capital gains (held > 12 months) on equity mutual funds are taxed at 12.5% above ₹1.25 lakh per year, as revised in the Union Budget 2024.
Is indexation available on property sales after July 2024?+
No. Budget 2024 removed the indexation benefit for property and gold sold after 23 July 2024. The LTCG rate was simultaneously reduced to 12.5% without indexation.
How much LTCG on shares is tax-free?+
The first ₹1,25,000 of long-term capital gains from listed equity shares and equity mutual funds is exempt from tax each financial year.
Can I set off capital losses against capital gains?+
Yes. Short-term losses can offset both STCG and LTCG. Long-term losses can only offset LTCG. Unused losses can be carried forward for 8 years if you file your ITR on time.
What ITR form should I use to report capital gains?+
Use ITR-2 if you have capital gains from shares, mutual funds, or property (and no business income). Use ITR-3 if you also have income from business or profession.
Try the calculators
Keep reading
- Tax on Mutual Funds in India: STCG, LTCG, Dividends, and Debt Fund Rules
The returns on your mutual fund are not what you keep — the tax on the way out can vary from 0% to your full slab rate depending on what and how long you held.
- How Income Tax Slabs Work in India: A Step-by-Step Guide for FY 2025-26
India does not tax your entire income at one rate — understanding how slabs work could change how you read your pay slip.
- Old vs New Tax Regime India: Which Should You Choose?
Choosing the wrong tax regime could cost you thousands — here is how to pick the right one for your salary and investments.
Elena writes about taxes and the money side of running a small business. She’s on a mission to make VAT, margins, and break-even points feel a lot less scary.