Capital gains tax in India 2026 — complete guide

Budget 2024 (Jul 2024) overhauled capital gains taxation in India. Most people are still using outdated rules. Here's the complete picture as of FY 2025-26 and beyond.

The big simplification

• Equity LTCG: 10% → 12.5% on gains above ₹1.25L (was ₹1L)
• Equity STCG: 15% → 20%
• Debt MF (post 1 Apr 2023): All gains taxed at slab rate. No LTCG benefit.
• Gold: Holding period reduced 36 → 24 months for LTCG. Rate 12.5% without indexation.
• Property: Now 12.5% without indexation, or 20% with indexation (for property bought before 23 Jul 2024). New properties: 12.5% only.
• Unlisted shares: 24 months for LTCG. Rate 12.5%.

Holding periods (memorise these)

Asset	Long term threshold
Listed equity / equity MF	12 months
Debt MF (post Apr 2023)	N/A — always slab rate
Gold (physical, ETF, sovereign bonds)	24 months
Property (residential / commercial / land)	24 months
Unlisted shares	24 months
REITs / InvITs	12 months

Equity LTCG — the most common scenario

You held an equity mutual fund for 14 months, sold at ₹3 lakh profit. How much tax?

• Holding period 14 months ≥ 12 → Long term ✓
• Profit ₹3L > ₹1.25L exemption → Taxable gain = ₹1.75L
• Tax = ₹1.75L × 12.5% = ₹21,875
• Cess = ₹21,875 × 4% = ₹875
• Total LTCG tax = ₹22,750

Property — the dual regime

For property bought before 23 July 2024, you can choose either:

• Old regime: 20% with indexation (use Cost Inflation Index to inflate buy price)
• New regime: 12.5% without indexation

For property bought after 23 July 2024: only 12.5% without indexation. No choice.

When does each win?

• Long holding (15+ years), good appreciation: Old regime + indexation usually wins
• Short holding (3–10 years), modest appreciation: New 12.5% wins
• Property at loss / stagnant: Old regime wins (indexation can create paper losses)

Saving capital gains tax

Equity LTCG — tax-loss harvesting

Sell loss-making positions to offset gains within ₹1.25L exemption. Then re-buy if you still believe in them. Allowed in India (no wash sale rule).

Property — Section 54 (residential reinvestment)

Sell residential property → invest LTCG in another residential property within 2 years. Full exemption. New 2024 cap: ₹10 crore exemption only on gains, not unlimited.

Section 54EC bonds

Invest LTCG up to ₹50 lakh in NHAI / REC / IRFC bonds within 6 months. 5-year lock-in, 5–6% return. Tax-free.

Section 54F

Sell ANY asset → invest entire net consideration in residential property. Full LTCG exemption (proportional if partial). Stricter than 54.

Reporting in ITR

• Equity / equity MF: Schedule CG → Section A → STT-paid securities
• Debt MF: Schedule CG → Section A → Other (slab rate applies)
• Property: Schedule CG → Section B → Land/Building
• Gold: Schedule CG → Section A → Other capital assets
• If LTCG > ₹1.25L for equity: ITR-2 or ITR-3 needed (not ITR-1)

Common errors that trigger notices

• Not reporting MF SIPs that were redeemed (broker / RTA already reports to IT)
• Mixing FY of buy and sell wrongly
• Not claiming ₹1.25L LTCG exemption (default exemption — file correctly to claim it)
• Forgetting to add CTC stamp duty / brokerage to cost of acquisition for property
• Reporting equity MF gains as "Income from Other Sources" — wrong head

FAQs

Is mutual fund switch a taxable event?

Yes — switching from one MF to another (even within same AMC) = redemption of old + purchase of new. Both LTCG/STCG rules apply.

Are dividends taxable?

Yes — taxable at slab rate from FY 2020-21 onwards. The dividend distribution tax (DDT) era is over.

What about ULIP?

If annual premium ≤ ₹2.5L: tax-free under 10(10D). Above ₹2.5L: taxed like equity (12.5% LTCG). Death benefit always tax-free.

Can I carry forward LTCG losses?

Yes for equity LTCG losses — can be set off against any LTCG (debt, property, gold) for next 8 years. STCG losses set off against STCG/LTCG, also 8 year carry forward.