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Capital Gains Tax in India 2026: A Practical Guide After the 2024 Reforms

4 May 202611 min readBy Calculatorist Finance Editorial Team

The Finance Act 2024 made some of the biggest changes to capital gains tax in two decades — removing indexation on property and gold, and dropping LTCG rates uniformly to 12.5%. For investors and property owners, these changes shift the after-tax math on every major asset class. Here's the post-reform landscape, with examples for each.

What Counts as a Capital Gain

When you sell an asset for more than you paid, the profit is a capital gain. The Income Tax Act splits these into Short-Term (STCG) and Long-Term (LTCG) based on holding period — and the cutoffs vary by asset class.

  • Listed equity / equity MFs — STCG if held under 12 months, LTCG if 12+ months.
  • Real estate / property — STCG if held under 24 months, LTCG if 24+ months.
  • Gold (physical, ETF, fund) — STCG if under 24 months, LTCG if 24+ months.
  • Debt mutual funds — purchased on/after 1 April 2023 are always taxed at slab rate (no LTCG benefit). Pre-Apr-2023 holdings can claim LTCG with indexation if held over 36 months.

Post-July 2024 Tax Rates

Listed Equity / Equity Mutual Funds

STCG: 20% flat (was 15% pre-July 2024). LTCG: 12.5% above ₹1.25 lakh annual exemption per financial year (was 10% above ₹1L).

₹1.25L exemption resets every April 1 — meaning a ₹3 lakh equity LTCG split across two financial years (₹1.5L each) attracts ₹3,125 tax instead of ₹21,875 if booked in one year.

Real Estate / Property

LTCG (post July 2024): 12.5% without indexation. Pre-July 2024 acquisition transitional: option to choose 20% with indexation OR 12.5% without — whichever is lower.

Indexation adjusts your purchase cost for inflation using CII (Cost Inflation Index). Removed for new acquisitions; preserved as transitional option for legacy holdings.

STCG: at slab rate (not flat 20% like equity).

Gold and Unlisted Shares

Same as property: 12.5% LTCG without indexation post-July 2024 (transitional option for older holdings). STCG at slab.

Sovereign Gold Bonds held to maturity (8 years) are fully exempt from capital gains — a unique advantage.

Debt Mutual Funds

Acquired on/after 1 April 2023: always taxed at slab rate. Holding period doesn't help. Effectively no LTCG benefit available.

Acquired before 1 April 2023 and held over 36 months: 20% LTCG with indexation (the old regime).

Worked Example: Equity LTCG With Annual Exemption

Bought ₹5 lakh equity MF in March 2023. Sold ₹8 lakh in October 2026. Held 43 months — qualifies as LTCG.

Gain = 8L − 5L = ₹3 lakh. Annual exemption = ₹1.25 lakh. Taxable = ₹1.75 lakh. Tax = 12.5% × 1.75L = ₹21,875. Plus 4% cess = ₹22,750.

Alternative: split sale across two FYs. ₹4 lakh sold in March 2026 (gain ₹1 lakh, fully exempt) + ₹4 lakh in April 2026 (gain ₹2 lakh, ₹0.75 lakh taxable after another ₹1.25 lakh exemption). Tax = ₹9,375 + cess = ₹9,750. Saving = ₹13,000.

Worked Example: Property LTCG With Reinvestment

Bought a flat in 2010 for ₹40 lakh. Sold in 2026 for ₹1.6 crore. LTCG = ₹1.2 crore. Tax at 12.5% = ₹15 lakh + cess = ₹15.6 lakh.

Section 54 reinvestment — buy another residential property within 2 years (purchase) or 3 years (construction). Tax on the reinvested portion is exempt.

Section 54EC — invest up to ₹50 lakh of LTCG in NHAI/REC bonds within 6 months. Bonds yield ~5.25% for 5 years. Saves ₹6.25 lakh tax on this portion.

Combine both — reinvest ₹70 lakh in another residential property + ₹50 lakh in 54EC bonds = ₹1.2 crore deployed, ZERO LTCG tax owed. Net cash freed: ₹40 lakh tax-free residual.

Tax-Loss Harvesting in Equity

Short-term capital losses on equity can offset both STCG and LTCG in the same year (and carry forward 8 years). Long-term losses can only offset LTCG.

Year-end tax-loss harvesting is a legal technique: sell losing positions to book the loss, then buy back similar (not identical) positions to reset cost basis. Indian rules don't have a US-style 'wash sale' restriction — you can buy back the same fund the next day if you want.

Example: ₹2 lakh equity gain plus ₹1 lakh latent loss in another fund. Booking the loss reduces taxable to ₹1 lakh; immediately reinvesting in a different equally-good fund preserves market exposure. Saves ~₹12,500 tax with no change in portfolio.

When Capital Gains Push You Into Higher Surcharge

Surcharge tiers (10% above ₹50L, 15% above ₹1cr, 25% above ₹2cr) apply on capital gains tax too. A large property sale can push your total taxable income across a surcharge cutoff, dramatically increasing the marginal rate.

Mitigation: spread sales across years, use 54/54F/54EC reinvestments, or pair gain bookings with loss bookings to stay below the next surcharge tier.

Run Your Numbers

Use the capital gains calculator to compute exact tax for any equity, property, gold, or debt MF transaction with the right rate, exemption, and surcharge handling.

For overall planning, the income tax calculator shows how capital gains affect your total tax bill and whether you cross surcharge tiers.

Calculate your capital gains tax

Pick the asset class, enter purchase and sale, and get exact tax with post-July 2024 rates.

Open Capital Gains

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