Capital gains tax India 2026: the complete guide to STCG, LTCG rates and exemptions

Capital gains tax in India has two versions — short-term (STCG) and long-term (LTCG) — and which one applies to you depends on what you sold and how long you held it. The July 2024 Budget overhauled rates significantly, so if you're still using pre-2024 figures, you're working with the wrong numbers.

This guide covers current rates across every major asset class, how the tax is calculated, the exemptions available, and what changed after the July 2024 amendments.

Use the capital gains calculator to run your own numbers alongside this guide.

What is a capital gain?

A capital gain arises when you sell a capital asset — shares, property, gold, mutual fund units — for more than you paid for it. The gain is the selling price minus your cost of acquisition (adjusted for improvements and eligible expenses).

That gain is then taxed either as STCG or LTCG depending on how long you held the asset before selling.

Short-term vs long-term: how holding period works

The cut-off differs by asset type:

Asset class	STCG holding period	LTCG holding period
Listed equity shares	Up to 12 months	More than 12 months
Equity-oriented mutual funds	Up to 12 months	More than 12 months
Debt mutual funds (non-equity)	Up to 24 months	More than 24 months
Immovable property (house, land)	Up to 24 months	More than 24 months
Unlisted shares	Up to 24 months	More than 24 months
Gold / jewellery	Up to 24 months	More than 24 months
Bonds (listed)	Up to 12 months	More than 12 months

The July 2024 Budget standardised the LTCG threshold for most non-equity assets at 24 months.

Current STCG and LTCG tax rates (FY 2025-26)

Listed equity and equity mutual funds

STCG — Section 111A Gains on listed equity shares and equity-oriented mutual funds where STT (Securities Transaction Tax) was paid: 20% flat. This rate was raised from 15% to 20% effective 23 July 2024. No slab benefit applies — even if your total income is below ₹3 lakh, STCG under 111A is taxed at 20%.

LTCG — Section 112A Gains on the same assets, held more than 12 months: 12.5% on gains above ₹1.25 lakh per financial year. The first ₹1.25 lakh of LTCG in a year is entirely exempt. This exemption threshold was raised from ₹1 lakh to ₹1.25 lakh in July 2024 and applies from FY 2024-25 onward.

Indexation does not apply to equity or equity mutual fund gains at any point.

Immovable property (house, plot, building)

Holding period: 24 months to qualify as long-term.

STCG on property: taxed at your income-tax slab rate (no special flat rate).

LTCG on property — Section 112:

Property transferred on or after 23 July 2024: 12.5% without indexation
Grandfathering clause: if the property was purchased before 23 July 2024 and is being sold on or after that date, resident individuals and HUFs can choose between:
- 12.5% without indexation, or
- 20% with indexation (using CII to inflate cost of acquisition)

Whichever option results in lower tax is available to you. For assets bought many years ago with a low original cost, the indexed-cost option typically wins. For properties purchased close to 23 July 2024, 12.5% without indexation may be lower.

Gold and jewellery

Same treatment as property: STCG at slab rate; LTCG at 12.5% without indexation (or 20% with indexation if purchased before 23 July 2024).

Debt mutual funds

Post-April 2023, gains on debt mutual funds (where equity exposure is under 35%) are taxed at your slab rate regardless of holding period — there is no longer a separate LTCG rate or indexation benefit for debt funds.

Unlisted shares

LTCG on unlisted shares: 12.5% without indexation (or 20% with indexation if acquired before 23 July 2024, at the taxpayer's option). STCG at slab rate.

Summary rate table

Asset	STCG rate	LTCG rate
Listed equity / equity MF (with STT)	20% (Sec 111A)	12.5% above ₹1.25L (Sec 112A)
Property (sold after 23 Jul 2024, bought after)	Slab	12.5% no indexation
Property (bought before 23 Jul 2024, sold after)	Slab	Lower of: 12.5% or 20% with CII
Gold / jewellery	Slab	12.5% (or 20% with CII if pre-Jul 2024)
Unlisted shares	Slab	12.5% (or 20% with CII if pre-Jul 2024)
Debt mutual funds	Slab	Slab
Listed bonds	Slab	12.5%

How to calculate capital gains: worked examples

Example 1 — LTCG on equity shares

You bought 500 shares of a listed company at ₹200 each in March 2024 and sold them in April 2025 at ₹350 each.

Sale proceeds: ₹1,75,000
Cost of acquisition: ₹1,00,000
LTCG: ₹75,000

Since ₹75,000 is under the ₹1.25 lakh annual exemption, the tax is ₹0. If the gain had been ₹1,50,000, only ₹25,000 (₹1,50,000 − ₹1,25,000) would be taxed at 12.5%, giving a tax of ₹3,125.

Example 2 — STCG on equity shares

You bought shares at ₹1,00,000 and sold within 8 months for ₹1,30,000. Gain: ₹30,000.

Tax at 20%: ₹6,000 (plus surcharge/cess as applicable).

Example 3 — LTCG on property (bought after 23 Jul 2024)

Property purchased in January 2025 for ₹40 lakh. Sold in March 2027 for ₹55 lakh.

Holding period: 26 months — qualifies as long-term
LTCG: ₹15 lakh
Tax at 12.5%: ₹1,87,500

Example 4 — LTCG on property (grandfathering — bought before 23 Jul 2024)

Property purchased in FY 2012-13 for ₹30 lakh. Sold in June 2025 for ₹90 lakh. CII for FY 2012-13: 200. CII for FY 2025-26: 376.

Indexed cost = ₹30 lakh × (376 / 200) = ₹56.4 lakh

Option A — 12.5% without indexation: LTCG = ₹60 lakh. Tax = ₹7.5 lakh

Option B — 20% with indexation: LTCG = ₹90L − ₹56.4L = ₹33.6 lakh. Tax = ₹6.72 lakh

Option B is lower here — the 20%-with-indexation route saves ₹78,000.

Use the capital gains calculator to run this comparison for your own numbers automatically.

Key exemptions available on LTCG

LTCG tax can be legally reduced or deferred using three main sections of the Income Tax Act:

Section 54 — if you sell a residential house and reinvest the gains in another residential property, the gains are exempt up to the reinvestment amount. You have 1 year before or 2 years after the sale to buy, or 3 years to construct.

Section 54F — if you sell any long-term asset other than a residential house (land, shares, gold) and invest the entire net consideration in a residential house, gains are proportionally exempt. The maximum exemption is capped at ₹10 crore (from April 2024). You must not already own more than one other house on the date of sale.

Section 54EC — invest capital gains (not just gains, but the gains portion) in NHAI or REC bonds within 6 months of the sale, up to ₹50 lakh. Gains are exempt to the extent of investment.

Full details: Sections 54, 54F and 54EC exemptions — how to save LTCG on property

Indexation and the CII chart

The Cost Inflation Index (CII) adjusts your purchase price for inflation, lowering the taxable gain under the 20%-with-indexation route. The CII for FY 2025-26 is 376.

Indexed cost = Original cost × (CII of sale year / CII of purchase year)

After July 2024, indexation is only available to resident individuals and HUFs for immovable property purchased before 23 July 2024. It no longer applies to equity, equity mutual funds, or debt funds.

Full CII table and calculation examples: Indexation and CII chart for capital gains 2026

How capital gains fit into your ITR

Capital gains must be reported in your Income Tax Return regardless of whether tax is payable. Even if LTCG is under ₹1.25 lakh and fully exempt, you still need to report the transaction in Schedule CG.

Key points:

STCG under 111A and LTCG under 112A cannot be set off against salary or other regular income
STCG and LTCG can be set off against other capital gains losses within the same year (short-term losses can offset both STCG and LTCG; long-term losses can only offset LTCG)
Unadjusted capital losses can be carried forward for 8 assessment years, but only against capital gains — not against other income

For salaried individuals, capital gains are reported alongside your salary in the same ITR-2 or ITR-3 form. The full income tax planning picture: Income tax planning India 2026.

After July 2024: what changed and what didn't

Changed:

STCG on listed equity: 15% → 20%
LTCG exemption: ₹1L → ₹1.25L
Indexation removed for new property purchases (post 23 Jul 2024)
Holding period for most non-equity assets: standardised at 24 months
LTCG rate on most non-equity assets: 20% with indexation → 12.5% without indexation

Unchanged:

LTCG rate on equity (Sec 112A) is still 12.5%
Sections 54, 54F, 54EC exemptions still apply
Grandfathering: pre-23 July 2024 property purchases can still use 20% + indexation
Debt mutual funds: slab rate (this change was from April 2023, not July 2024)

Five things to do before the financial year ends

Book losses before 31 March to offset gains elsewhere in your portfolio — set-off is allowed only within the same year.
Check whether your LTCG on equity is approaching ₹1.25 lakh — if you're just under, avoid selling any more equity until the new financial year resets the exemption.
If selling property bought before July 2024, run both scenarios (12.5% vs 20% + CII) — the indexed route often wins for older purchases.
If you can't reinvest property gains before your ITR due date, deposit unused amounts in a Capital Gain Account Scheme (CGAS) bank account to preserve the Section 54 exemption window.
Report all capital gains in Schedule CG even if the tax is nil — omitting them creates discrepancy notices.

Related guides in this cluster

This article is for informational purposes only. For personalised tax advice, consult a SEBI-registered financial advisor or a chartered accountant.

Frequently asked questions

What is the LTCG tax rate in India for 2026?

For listed equity shares and equity mutual funds, LTCG (Section 112A) is taxed at 12.5% on gains above ₹1.25 lakh per year — gains below this threshold are completely exempt. For property and other long-term assets sold after 23 July 2024, the rate is 12.5% without indexation. If the property was purchased before 23 July 2024, you can alternatively pay 20% with indexation benefit if that works out lower.

What is the STCG tax rate on shares in India?

Short-term capital gains on listed equity shares and equity-oriented mutual funds where STT is paid are taxed under Section 111A at a flat 20%. This rate increased from 15% to 20% in the July 2024 Union Budget and applies to transactions from 23 July 2024 onward.

How is capital gains tax calculated in India?

Start with sale consideration minus cost of acquisition (and cost of improvement where applicable). For LTCG on pre-July 2024 property, you can inflate the cost using the Cost Inflation Index. The resulting gain is then taxed at the applicable rate — 20% STCG under 111A, 12.5% LTCG under 112A for equity, or 12.5%/20% for other assets. Use the capital gains calculator to run exact numbers.

Is there a capital gains tax exemption in India?

Yes. The ₹1.25 lakh annual exemption applies to LTCG under Section 112A (equity/equity MF). For property, Sections 54, 54F, and 54EC allow exemptions when gains are reinvested in residential property or specified bonds. These exemptions require meeting specific conditions on timing, asset type, and reinvestment amount.

Do I need to report capital gains in ITR if the tax is zero?

Yes. Capital gains must be reported in Schedule CG of your ITR even if the amount is below the exemption threshold or if losses cancel out all gains. Failing to report creates automated mismatch notices when the tax department cross-checks broker data (Form 26AS and AIS).

Can I set off capital losses against salary income?

No. Capital losses — whether short-term or long-term — cannot be set off against salary, business income, or other ordinary income. They can only be offset against capital gains. Short-term capital losses can offset both STCG and LTCG. Long-term capital losses can offset only LTCG. Unabsorbed losses carry forward for 8 years.

Capital Gains Tax India 2026: STCG, LTCG Rates & Calculator