Budget 2024 reshaped capital gains taxation in India. Equity LTCG moved from 10% to 12.5% (with exemption increased to ₹1.25 lakh). Equity STCG jumped from 15% to 20%. Indexation was removed for most assets. A uniform 12.5% LTCG rate now applies across all asset classes. Debt mutual fund investors got the worst deal — funds bought after April 2023 have no long-term benefit at all, taxed at slab rate regardless of holding period. Under the Income Tax Act, these changes affect every investor in India — from SIP investors to property sellers to NPS subscribers.
This guide covers every asset class with the current rates, holding periods, exemptions, and practical tax-saving strategies. For the impact on your real returns after tax and inflation, see our Fisher equation guide. Use our Capital Gains Calculator for exact computation.
Equity LTCG: 10% → 12.5% (exemption ₹1L → ₹1.25L). Equity STCG: 15% → 20%. Indexation: Removed for most assets (property exception for pre-July 2024 purchases). Debt MF: Always slab rate (post-April 2023 purchases). Uniform LTCG: 12.5% across all asset classes.
The Master Tax Rate Table (FY 2025-26)
| Asset Class | Holding for LTCG | STCG Rate | LTCG Rate | Exemption | Indexation |
|---|---|---|---|---|---|
| Listed equity shares | Over 12 months | 20% (Sec 111A) | 12.5% (Sec 112A) | ₹1.25L/yr | No |
| Equity mutual funds (≥65% equity) | Over 12 months | 20% | 12.5% | ₹1.25L/yr | No |
| ELSS funds | 3yr lock-in (always LTCG) | N/A | 12.5% | ₹1.25L/yr | No |
| Hybrid funds (equity 35-65%) | Over 24 months | Slab rate | 12.5% | None | No |
| Debt MF (post Apr 2023) | N/A — always ST | Slab rate (up to 30%) | N/A | None | No |
| Property (land, building) | Over 24 months | Slab rate | 12.5% | Sec 54/54F | Choice* |
| Gold, gold ETFs | Over 24 months | Slab rate | 12.5% | None | No |
| International funds | Over 24 months | Slab rate | 12.5% | None | No |
| Unlisted shares | Over 24 months | Slab rate | 12.5% | None | No |
| Listed bonds, debentures | Over 12 months | Slab rate | 12.5% | None | No |
*Property indexation choice: For land/building acquired before 23 July 2024, individuals and HUFs can choose between 12.5% without indexation OR 20% with indexation — whichever gives lower tax. The Cost Inflation Index (CII) adjusts purchase price for inflation. For newer purchases, only 12.5% without indexation applies. STT (Securities Transaction Tax) must be paid on equity transactions for Section 111A/112A rates to apply.
How Capital Gains Tax Affects Your Real Returns
The real impact of capital gains tax on your investments — using the Fisher equation to calculate post-tax, post-inflation returns:
| Instrument | Nominal Return | Tax Impact | Post-Tax Return | Real Return (6% CPI) |
|---|---|---|---|---|
| PPF (EEE) | 7.1% | Zero tax | 7.1% | +1.04% |
| EPF (EEE) | 8.25% | Zero tax | 8.25% | +2.12% |
| SSY (EEE) | 8.2% | Zero tax | 8.2% | +2.08% |
| Equity SIP 12% (LTCG 12.5%) | 12% | ~1.4% effective | ~10.6% | +4.34% |
| FD 7% (30% slab) | 7% | 2.1% (30%) | 4.9% | -1.04% |
| Debt MF 7.5% (30% slab) | 7.5% | 2.25% (30%) | 5.25% | -0.71% |
Equity with LTCG at 12.5% still delivers strong +4.34% real returns. EEE instruments (PPF, EPF, SSY) are the most tax-efficient fixed-income options. Debt mutual funds post-April 2023 now have the same tax disadvantage as FDs — making them poor financial planning choices and weak wealth creation vehicles for high-bracket taxpayers. The ₹1.25 lakh annual LTCG exemption on equity means most retail SIP investors with moderate portfolios pay minimal equity tax. For the complete mutual fund returns after tax and inflation analysis, see our detailed guide.
Calculate Your Capital Gains Tax
Enter purchase price, sale price, and holding period to see exact STCG/LTCG tax with exemptions.
Open Capital Gains Calculator →Tax-Saving Exemptions on Capital Gains
| Section | Applies To | Condition | Limit | Lock-in |
|---|---|---|---|---|
| Section 54 | LTCG from residential property sale | Buy new residential property within 1yr before / 2yr after (or construct within 3yr) | Full LTCG exempted | 3 years (new property) |
| Section 54F | LTCG from any asset (except property) | Invest net sale proceeds in new residential property | Proportional exemption | 3 years |
| Section 54EC | LTCG from any asset | Invest in specified bonds (NHAI, REC, IRFC) within 6 months | ₹50 lakh per FY | 5 years |
| Section 112A | Equity LTCG | Automatic — first ₹1.25L exempt | ₹1.25 lakh/yr | Hold >12 months |
| CGAS | Any LTCG exemption | Deposit gains in Capital Gains Account if not reinvested before ITR filing | As per applicable section | As per section |
Capital Loss Set-Off Rules and Tax Harvesting
| Loss Type | Can Set Off Against STCG? | Can Set Off Against LTCG? | Carry Forward |
|---|---|---|---|
| Short-Term Capital Loss (STCL) | Yes ✅ | Yes ✅ | Up to 8 years (file ITR on time!) |
| Long-Term Capital Loss (LTCL) | No ❌ | Yes ✅ | Up to 8 years (file ITR on time!) |
Tax harvesting strategy: Before March 31, sell loss-making equity investments to book losses. Set these losses off against your gains and immediately repurchase. This is fully legal and can save significant tax — especially useful for LTCG above ₹1.25 lakh. Critical: TDS is deducted on NRI capital gains. You must file your ITR by the due date to carry forward losses — late filing permanently forfeits this right. For understanding how LTCG affects CAGR and absolute returns, see our guide. Plan your retirement corpus with tax-adjusted returns using our Retirement Corpus Calculator. Compare instruments in our NPS vs PPF vs EPF and gold vs FD vs equity guides. For tax-saving investments, see Section 80C and old vs new tax regime. Use our SIP Calculator, Step-Up SIP Calculator, Lumpsum Calculator, Mutual Fund Calculator, EPF Calculator, PPF Calculator, SWP Calculator, Inflation Calculator, Purchasing Power Calculator, and FIRE Calculator. See 7 strategies to beat inflation, cost of delaying investment, Step-Up SIP benefits, pension vs lumpsum, RD vs SIP, EPF rate history, and salary hike vs inflation.