Capital Gains Tax in India: Rates, Holding Periods and Exemptions
Publishing Date: 7 October, 2026
When you sell shares, mutual funds, property or gold at a profit, the gain is taxed as capital gains. The tax depends on two things: what you sold and how long you held it.
Note: the Income-tax Act, 2025 has replaced the Income-tax Act, 1961 from 1 April 2026. Section and form numbers have changed, but the concepts explained here continue. Always check the provisions that apply to your tax year.
Short-term vs long-term
| Asset | Long-term if held for more than |
|---|---|
| Listed shares, equity mutual funds, listed units | 12 months |
| Unlisted shares, property, gold, other assets | 24 months |
Current tax rates
| Asset | Short-term | Long-term |
|---|---|---|
| Listed equity / equity MF (STT paid) | 20% | 12.5% on gains above Rs 1.25 lakh a year |
| Property, unlisted shares, gold | Slab rates | 12.5% without indexation |
| Specified debt mutual funds (bought from 1 April 2023) | Slab rates, regardless of holding period | |
Surcharge and 4% cess apply on top. Resident individuals and HUFs selling land or buildings bought before 23 July 2024 can compare 20% with indexation against 12.5% without and pay the lower tax.
Main exemptions
- Buying a new house from long-term gains on a residential house (commonly section 54), within set time limits.
- Buying a house from other long-term gains (commonly section 54F), investing the full sale proceeds for full exemption.
- Specified bonds (commonly section 54EC) from long-term gains on land or building, up to Rs 50 lakh, within six months.
- Capital Gains Account Scheme to park money until you buy the new house before the return due date.
Computing the gain
- Sale price minus transfer expenses (brokerage, stamp duty paid by you).
- Minus cost of acquisition and cost of improvement.
- For shares bought before 1 February 2018, grandfathering rules may raise the cost.
- Set off losses: short-term losses against any gains; long-term losses only against long-term gains.
Tips
- Harvest equity gains up to the Rs 1.25 lakh exemption every year.
- Pay advance tax in the quarter you book a large gain.
- Download the capital gains statement from your broker and mutual fund registrar before filing.
Estimate your tax with our capital gains calculator, and let us file your ITR-2.
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Frequently Asked Questions
Q1. What is the tax on long-term gains from shares?
Long-term gains on listed equity shares and equity mutual funds are taxed at 12.5% on gains above Rs 1.25 lakh in a year, where STT has been paid.
Q2. Is indexation still available on property?
Generally no. But resident individuals and HUFs selling land or buildings acquired before 23 July 2024 can choose 20% with indexation or 12.5% without, whichever is lower.
Q3. How are debt mutual funds taxed?
Units of specified debt funds bought on or after 1 April 2023 are taxed at slab rates, whatever the holding period.
Q4. Which ITR form should I use for capital gains?
Individuals with capital gains and no business income generally use ITR-2. Those with business income use ITR-3.
Related guides
Mukul Tomar writes Vaidam Consultancy’s guides on company registration, GST, income tax and ROC compliance. An experienced blog writer on Indian tax and business law, his articles have also been published on TaxGuru. He turns complex rules into clear, practical steps that business owners can act on.
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