Capital gains tax in India (FY 2025-26) — equity, real estate, gold explained

Quick answer: Budget 2024 (effective 23 July 2024) overhauled India's capital gains tax. Listed equity LTCG: 12.5% (was 10%) above ₹1.25 lakh per year (was ₹1 lakh). Listed equity STCG: 20% (was 15%). Real estate / unlisted shares LTCG: 12.5% no-indexation by default, but pre-23-Jul-2024 purchases can choose 20% with indexation. Holding periods simplified to 12 months for listed, 24 months for everything else.

Most savings products you held before now have a different tax outcome at sale. The post-Budget changes are confusing; this guide and the calculator handle them correctly.

The new asset-by-asset matrix

Asset	LT period	STCG rate	LTCG rate
Listed equity / equity MF	≥ 12 months	20%	12.5% above ₹1.25 L/year exemption
Real estate	≥ 24 months	Slab rate	12.5% no-indexation, OR 20% with indexation if bought before 23 Jul 2024
Gold (physical / ETF)	≥ 24 months	Slab rate	12.5% no indexation
Unlisted shares / ESOPs	≥ 24 months	Slab rate	12.5% no indexation
Foreign equity	≥ 24 months	Slab rate	12.5% no indexation
Debt MF (bought before Apr 2023)	≥ 24 months	Slab rate	12.5%
Debt MF (bought after Apr 2023)	—	Slab rate	Always slab — no LTCG benefit

Plus 4% health & education cess on top of the tax amount. So 12.5% effectively becomes 13%.

Listed equity: the ₹1.25 lakh exemption

For listed shares and equity mutual funds (≥ 65% in equity), you get up to ₹1.25 lakh of LTCG tax-free per financial year. Above that, the rate is 12.5%.

Examples:

• Sold equity for ₹2 L LTCG. Taxable: ₹75,000. Tax: 12.5% × 75k = ₹9,375. Cess: ₹375. Total: ₹9,750.
• Sold equity for ₹1 L LTCG. Taxable: ₹0. No tax.
• Sold for ₹4 L LTCG. Taxable: ₹2.75 L. Tax: ₹34,375. Cess: ₹1,375. Total: ₹35,750.

The exemption is per financial year, per individual — so a couple can together exempt ₹2.5 lakh by holding equity in both names.

Tax-loss harvesting in March

Smart investors realise losses before March 31 to offset other gains. Short-term capital losses can offset both short-term and long-term gains. Long-term capital losses can only offset long-term gains.

So if you have ₹2 L of LTCG and ₹50k of unrealised STCL (short-term capital loss) on a poorly-performing fund, sell the fund in March, book the loss, and offset ₹50k of the LTCG. Tax saving: 12.5% × 50k = ₹6,250 + cess.

Re-buy the fund in April if you still want the exposure.

Real estate: the indexation choice

Budget 2024 simplified real estate LTCG to a flat 12.5% with no indexation. But for properties bought before 23 July 2024, you can still choose to use the old 20%-with-indexation method if it works out cheaper.

When does each work better?

• No-indexation (12.5%) wins when your purchase price is recent and gains are large. New rule applies to all post-23-Jul-2024 purchases regardless.
• With-indexation (20%) wins for very long-held properties (10+ years) where indexation roughly doubles or triples the cost basis.

Example — 1 BHK in Mumbai bought in 2008 for ₹40 L, sold in 2025 for ₹1.5 Cr:

• No-indexation method: gain = 1.5 Cr − 40 L = ₹1.1 Cr. Tax: 12.5% × 1.1 Cr = ₹13.75 L.
• With-indexation method: indexed cost = 40 L × (363/137) = ₹1.06 Cr. Gain = 1.5 Cr − 1.06 Cr = ₹44 L. Tax: 20% × 44 L = ₹8.8 L.
• Indexation wins by ₹4.95 L.

The Capital Gains Calculator auto-picks the cheaper option for pre-23-Jul-2024 purchases.

Section 54, 54F and 54EC: real estate LTCG exemptions

You can avoid LTCG tax on real estate entirely if you reinvest:

• Section 54 — sell a residential property, buy another residential property within 1 year before / 2 years after / construct within 3 years. The reinvested amount is exempt. Up to ₹10 crore exemption (Budget 2023 cap).
• Section 54F — sell ANY long-term capital asset (gold, shares, etc), buy a residential property within similar timeframes. Conditions: you don't own more than one other residential property.
• Section 54EC — invest LTCG (up to ₹50 L per FY) in capital gain bonds (NHAI, REC, IRFC, PFC) within 6 months. Locked for 5 years at ~5.25% interest.

These are the most-used escape hatches. Many sellers use 54EC to defer ₹50 L of LTCG; for larger gains, Section 54 (buy another house) is the path.

Debt mutual funds — the bad news

If you bought a debt MF after 1 April 2023, there is no LTCG benefit anymore. The gain is always taxed at your marginal slab rate, regardless of how long you held it.

Pre-April-2023 debt MFs still get LTCG at 12.5% (also no indexation). For most retail investors, debt MFs are now tax-equivalent to FDs — useful for liquidity and risk diversification but not for tax-saving.

Common capital-gains mistakes

1. Forgetting STT-paid grandfathering for pre-2018 equity buys. Cost basis = max(actual cost, FMV on 31 Jan 2018). Saves significant tax for very old equity holdings.
2. Not booking ₹1.25 L LTCG every year. If you have a ₹5 L equity portfolio appreciating 10%/yr, sell + rebuy ₹1.25 L of LTCG every March. Resets your cost basis tax-free.
3. Confusing ESOPs. ESOP exercise = perquisite (taxed as salary). ESOP sale = capital gains. Two separate tax events.
4. Treating gold ETF as physical gold for tax. Gold ETFs are equity-like in mechanism but taxed like physical gold (LTCG 12.5% after 24 months).
5. Not filing capital gains schedule in ITR. Even if no tax due (e.g. LTCG below ₹1.25 L), report the gain. AIS/26AS will show the transaction; mismatched returns trigger notices.

Use the capital gains calculator

Open the Capital Gains Tax Calculator. Pick the asset type, enter purchase + sale dates and prices. The calculator:

• Determines if it's STCG or LTCG based on holding period
• Applies the correct rate (12.5% / 20% / slab)
• Handles the ₹1.25 L equity exemption (with already-booked LTCG tracking)
• For real estate, auto-picks indexation vs no-indexation if pre-23-Jul-2024
• Computes tax + 4% cess + post-tax gain

FAQ

Q. Is the ₹1.25 L LTCG exemption per fund or total? A. Total — it's a single annual exemption across all your equity LTCG, summed.

Q. Are dividends taxed? A. Yes — dividends are taxed at slab rate (treated as “income from other sources”), not capital gains. Different from STCG/LTCG.

Q. Do I need to pay advance tax on capital gains? A. Yes — capital gains are part of your total income. If your total tax liability exceeds ₹10,000 in a year, you must pay advance tax in instalments (15%, 45%, 75%, 100% by 15 Mar). Booking large gains in late Mar means you pay 100% by 15 Mar of the same year.

Q. Can I offset LTCG against current-year STCL? A. Yes. Short-term capital losses can be set off against any capital gains (short or long-term). Long-term capital losses can only be set off against long-term gains.

Q. How long can I carry forward a capital loss? A. 8 years, but only if you file your ITR by the due date. Miss the deadline and you lose the carry-forward. This is one of the biggest reasons to file ITR even if you have a loss-only year.