Capital Gains Tax in India: Complete Guide (2026)
Budget 2024 overhauled India's capital gains taxation in a way that affects almost every investor — equity, mutual funds, real estate, gold, and even crypto. The rules that applied before 23 July 2024 do not apply after that date, and any asset sold since then uses a new set of rates and holding-period definitions. This guide walks through the updated framework for 2026: short-term vs long-term, asset-class specific rates, the Rs. 1.25 lakh LTCG exemption on equity, indexation (now removed for most assets), and the Section 54/54F exemptions on property.
Short-term vs long-term: the new definitions
Budget 2024 streamlined holding-period definitions. As of FY 2025-26:
| Asset class | Short-term if held | Long-term if held |
|---|---|---|
| Listed equity shares & equity MF | < 12 months | ≥ 12 months |
| Unlisted equity, private company shares | < 24 months | ≥ 24 months |
| Debt mutual funds (post-April 2023) | Always short-term (slab rate) | N/A |
| Real estate (land, house, flat) | < 24 months | ≥ 24 months |
| Gold, bonds, ETF | < 24 months | ≥ 24 months |
| Cryptocurrency / VDA | Always 30% flat | N/A (no long-term benefit) |
Tax rates (transactions on or after 23 July 2024)
Equity & equity mutual funds
- STCG (Section 111A): 20% flat (was 15% before 23 July 2024)
- LTCG (Section 112A): 12.5% flat on gains exceeding Rs. 1.25 lakh per financial year (was 10% above Rs. 1 lakh)
Real estate and other long-term assets
The big change: indexation benefit has been removed for all assets except land/building bought before 23 July 2024 (grandfathering rule allows indexation with 20% tax OR no indexation with 12.5% tax — whichever is lower). For all new acquisitions, LTCG is a straight 12.5%.
Debt mutual funds
Debt mutual funds purchased on or after 1 April 2023 are always taxed at slab rate, regardless of holding period. The "long-term debt MF" category no longer exists for new buyers.
Cryptocurrency and VDAs
Flat 30% tax on any profit, 1% TDS on sale value above Rs. 10,000 per transaction (Rs. 50,000 per year for specified persons), and no deduction allowed for any expense other than acquisition cost. Losses cannot be set off against any other head.
Worked example 1: Equity mutual fund
Rahul sold equity mutual fund units for Rs. 8 lakh on 15 March 2026. He had purchased them in April 2022 for Rs. 5 lakh. Holding period: 3 years 11 months (long-term).
- Capital gain: 8,00,000 − 5,00,000 = Rs. 3,00,000
- Exempt under Section 112A: Rs. 1,25,000
- Taxable LTCG: Rs. 1,75,000
- LTCG tax @ 12.5%: Rs. 21,875 + 4% cess
Worked example 2: Property sale
Meera bought a flat in Pune for Rs. 50 lakh in April 2015. She sold it in November 2025 for Rs. 1.1 crore. Both dates are post-grandfathering for acquisition, so she uses 12.5% flat without indexation.
- Capital gain: 1,10,00,000 − 50,00,000 = Rs. 60,00,000
- LTCG tax @ 12.5%: Rs. 7,50,000 + 4% cess
Meera could invest the gain in another residential house under Section 54 or in NHAI/REC bonds under Section 54EC to claim exemption — details below.
Key exemptions
Section 54 — sale of house, buy another house
LTCG on sale of a residential house is fully exempt if the gain is reinvested in another residential house within:
- 1 year before or 2 years after sale (purchase), or
- 3 years after sale (construction)
The new house can be Indian only. Capped at Rs. 10 crore investment. From FY 2023-24 you can only own up to 2 residential houses at time of exemption.
Section 54F — sale of any long-term asset, buy a house
LTCG on sale of any long-term asset (other than a residential house) is exempt if the entire net sale consideration is invested in a residential house within the same timelines as Section 54. Proportional exemption if only part of consideration is invested.
Section 54EC — invest in capital gain bonds
LTCG on land/building can be exempted by investing up to Rs. 50 lakh per financial year in NHAI or REC bonds within 6 months of sale. The bonds lock in for 5 years and pay around 5.25% interest (taxable).
Grandfathering rule for pre-23 July 2024 property
For land or buildings purchased before 23 July 2024, on sale you have two options and can pick whichever is lower:
- 20% tax with indexation benefit (old regime continues)
- 12.5% tax without indexation (new regime)
For shorter holdings (under 10 years) the old 20%-with-indexation option is usually better. For 15+ year holdings where the market has kept up with inflation, the new 12.5% is often better.
Setting off capital losses
- Short-term loss can be set off against any capital gain (short or long).
- Long-term loss can be set off only against long-term gains.
- Unabsorbed losses can be carried forward 8 years, but only if ITR is filed within the due date.
Advance tax implication
Capital gains are not subject to TDS at source for most transactions (exceptions: 1% TDS on property sales over Rs. 50 lakh, 10% TDS on non-resident MF redemptions). The responsibility to pay tax through advance tax (15 June, 15 Sep, 15 Dec, 15 Mar) lies with the investor. Missing advance tax attracts Section 234B/234C interest.
Plan your tax around gains and losses
Use our tools to estimate your total tax including capital gains.
Income Tax Calculator More GuidesSources & References
Primary sources used to write and fact-check this guide. Updated when official notifications change.
Last reviewed by the AboutAll.in editorial team in April 2026. See our methodology for the full research process.
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