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Income Tax · Capital Gains

Capital Gains Tax in India

Rates, holding periods and exemptions for AY 2026-27 (FY 2025-26) — explained, and filed, by practising Chartered Accountants.

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The basics

What is capital gains tax?

When you sell a capital asset — shares, mutual funds, property, gold — for more than it cost you, the profit is a capital gain, taxed in the year of transfer. How much you pay turns on one thing first: how long you held the asset before selling.

The 23 July 2024 reset. The Finance (No. 2) Act, 2024 rewrote these rules from 23 July 2024 — simpler holding periods, new rates, and indexation withdrawn for most assets. Everything on this page reflects the current law for AY 2026-27.

Short-term gain (STCG)

Asset sold before completing the long-term holding period. Taxed at a higher rate — often your normal slab rate.

Long-term gain (LTCG)

Asset held beyond the threshold below. Taxed at a concessional flat rate, with a small annual exemption on equity.

Step 1

Short-term or long-term? Check the holding period

Listed shares, equity mutual funds, business trust unitsLong-term if held more than 12 months
Immovable property (land & building)Long-term if held more than 24 months
Unlisted shares, gold, and other assetsLong-term if held more than 24 months

The old 36-month bucket is gone — since 23 July 2024 there are just two holding periods. Debt mutual funds bought on or after 1 April 2023 are a special case (covered below).

Step 2

Capital gains tax rates for AY 2026-27

STCG — listed equity & equity MF (Section 111A, STT paid)20%
STCG — property, gold, unlisted shares, debt fundsYour slab rate
LTCG — listed equity & equity MF (Section 112A)12.5% over ₹1.25 lakh
LTCG — most other assets (Section 112)12.5%, no indexation

Rates are before surcharge and 4% Health & Education Cess. Surcharge on 111A / 112A gains is capped at 15%. The STCG equity rate rose from 15% to 20% for transfers on or after 23 July 2024. No Section 87A rebate applies to 112A long-term gains.

Estimate your liability with our income tax calculator

The big change

Indexation — and the one choice property owners still have

Indexation — raising your purchase cost using the Cost Inflation Index so the taxable gain shrinks — has been withdrawn for assets transferred on or after 23 July 2024. It survives in exactly one situation:

Property bought before 23 July 2024. If you are a resident individual or HUF selling land or a building acquired before that date, you may pay whichever is lower: 12.5% without indexation, or 20% with indexation (CII for FY 2025-26 = 376). Always compute both — older properties usually win with the 20% indexed option.

For property acquired on or after 23 July 2024, and for every other asset class, only the flat 12.5% applies. Equity shares were never eligible for indexation.

In numbers

Two quick examples

A. Listed shares (long-term)

You sell listed shares held over 3 years for a ₹3,00,000 long-term gain. The first ₹1,25,000 is exempt under Section 112A; the remaining ₹1,75,000 is taxed at 12.5%.

Tax = ₹21,875 (before cess)

B. House property (bought before 23 July 2024)

House bought in FY 2015-16 for ₹40,00,000, sold in FY 2025-26 for ₹90,00,000. As a resident selling pre-23-Jul-2024 property, you compare both routes:

• Option 1 — 12.5% flat: 12.5% of ₹50,00,000 = ₹6,25,000.
• Option 2 — 20% with indexation: indexed cost ≈ ₹40,00,000 × 376⁄254 ≈ ₹59,21,000; gain ≈ ₹30,79,000 × 20% ≈ ₹6,15,800.

Option 2 is marginally lower here — and for older properties it saves far more.

Illustrative, before surcharge and cess. Your figures depend on exact dates and costs — a CA will run both routes for you.

Save the tax

You can legally reduce the tax to nil — by reinvesting

Section 54

LTCG from a residential house, reinvested in another house (buy within 2 years, build within 3). Capped at ₹10 crore.

Section 54F

LTCG from any asset other than a house, if the full net sale value goes into one residential house. Capped at ₹10 crore.

Section 54EC

LTCG from land or building, invested in NHAI / REC bonds within 6 months. Capped at ₹50 lakh a year.

Full conditions, timelines and the Capital Gains Account Scheme

Filing

How capital gains go into your return

Which formSchedule CG in ITR-2 (no business income) or ITR-3 (with business income). ITR-1 / ITR-4 can't carry capital gains.
Advance taxA large gain can trigger advance tax — pay it in the quarter you book the gain to avoid interest.
Debt mutual fundsBought on/after 1 April 2023 — taxed at your slab rate, whatever the holding period.
LossesShort-term losses set off STCG & LTCG; long-term losses only LTCG; carry forward 8 years. Never against salary or business income.
When capital gains trigger advance tax
NRIs: capital gains & TDS on Indian assets

Questions

Capital gains tax FAQs

What is the capital gains tax rate in India for AY 2026-27?
STCG on listed equity is 20%; LTCG on listed equity is 12.5% on gains above ₹1.25 lakh; LTCG on most other assets is 12.5% without indexation; short-term gains on property, gold and debt funds are taxed at your slab rate.
Is indexation still available?
Only for resident individuals and HUFs selling land or a building acquired before 23 July 2024 — they may opt for 20% with indexation instead of 12.5% without. For everything else, indexation is gone.
How much LTCG on shares is tax-free?
Up to ₹1.25 lakh of long-term gains from listed equity shares and equity mutual funds each financial year, under Section 112A.
Which ITR form do I use for capital gains?
ITR-2 if you have no business income, ITR-3 if you do. Capital gains are reported in Schedule CG.
Are NRIs taxed on capital gains in India?
Yes — on assets situated in India. The buyer deducts TDS at source, and NRIs can still claim Sections 54, 54F and 54EC.

Rates verified for AY 2026-27 (FY 2025-26) under the Finance (No. 2) Act 2024 and CBDT Notification 70/2025 (CII = 376). Tax depends on your exact facts — confirm with your Chartered Accountant before filing.

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