Capital gains tax is what you pay on the profit when you sell an asset for more than it cost. What you sold and how long you held it set the rate. For FY 2026-27, listed shares and equity funds are taxed at their own rates; almost everything else shares one long-term rate of 12.5%.
The rules were rewritten in Budget 2024, so older guides and rules of thumb are often out of date.
Capital gains at a glance (FY 2026-27)
What counts as a capital gain?
A capital gain is the profit you make when you transfer a capital asset – listed or unlisted shares, mutual fund units, land, a building, gold, or bonds. The gain is the sale price minus what you paid, and minus allowable costs like brokerage or a broker's transfer charges.
Two points matter up front. First, the gain is only taxed in the year you actually sell; a holding that rises on paper is not taxed until you realise it. Second, some assets have their own reliefs – for example, reinvesting the proceeds of a house sale into another residential property can reduce the taxable gain under specific sections. Those reliefs are narrow and condition-heavy, so treat this as background, not a plan.
Short-term or long-term: how the holding period decides
The single biggest driver of your rate is how long you held the asset. Budget 2024 replaced a messy three-way system with just two holding periods, effective 23 July 2024:
- Listed securities – listed shares, equity mutual funds, listed bonds: long-term after more than 12 months.
- Everything else – unlisted shares, real estate, gold, physical assets: long-term after more than 24 months.
Debt mutual funds and unlisted bonds are the exception. Since Budget 2024 (Section 50AA), gains on debt funds bought on or after 1 April 2023, and on unlisted bonds and debentures, are taxed at your slab rate however long you hold them, so they have no long-term route at all.
Hold for less than the relevant period and the gain is short-term; hold longer and it is long-term. The two are taxed very differently, which is why the calendar date of purchase and sale is worth recording precisely.
How are listed shares and equity funds taxed?
Listed shares and equity-oriented mutual funds on which securities transaction tax (STT) is paid have their own rules:
- Short-term (12 months or less): 20% flat. Budget 2024 raised this from the earlier 15%.
- Long-term (more than 12 months): 12.5%, but only above ₹1.25 lakh of such gains in a financial year. Gain ₹1 lakh and you pay nothing; gain ₹2.25 lakh and you pay 12.5% on the ₹1 lakh excess.
The ₹1.25 lakh exemption is per PAN, per financial year, and does not carry forward. For the exact number on a specific sale, our LTCG calculator takes your purchase and sale details and returns the figure. Mutual fund investors will find every category – equity, debt, hybrid, gold – mapped out in the guide to the taxation of mutual funds.
How is everything else taxed – property, gold, unlisted shares?
For assets outside the listed-equity bucket, the pattern is different:
- Short-term (24 months or less): the gain is added to your total income and taxed at your slab rate.
- Long-term (more than 24 months): 12.5%, with no indexation. Before Budget 2024, most of these gains were taxed at 20% with indexation, which lifted your cost for inflation. That indexation is gone for holdings acquired on or after 23 July 2024.
Property carries one extra wrinkle. For land or a building bought before 23 July 2024, a resident individual or HUF can generally compute the long-term tax the old way (20% with indexation) if that works out lower than the new 12.5%. This transitional choice is fiddly, so it is one to check against current rules for your specific case.
| Asset | Short-term | Long-term line | Long-term rate |
|---|---|---|---|
| Listed shares & equity funds (STT paid) | 20% (≤12 months) | >12 months | 12.5% above ₹1.25 lakh/yr |
| Unlisted shares | Slab rate (≤24 months) | >24 months | 12.5% (no indexation) |
| Land or building | Slab rate (≤24 months) | >24 months | 12.5% (no indexation) |
| Gold, physical assets | Slab rate (≤24 months) | >24 months | 12.5% (no indexation) |
| Debt funds, unlisted bonds | Slab rate (any holding) | No long-term route | Slab rate |
What is grandfathering, and how does it protect older gains?
Grandfathering shields gains that built up before a rule changed, so you are not taxed retroactively.
The best-known case is listed equity. When long-term equity gains became taxable in 2018, the law protected everything up to 31 January 2018 by letting you treat the higher of your actual cost or that day's market value as your cost base. Buy a share in 2015 and sell it now, and only the growth after 31 January 2018 is in the net.
The property indexation option above is a second, newer form of grandfathering. The common thread: older holdings often carry protections that a flat reading of today's rate would miss.
Can I set off a capital loss?
Losses are not wasted. A short-term capital loss can be set off against both short-term and long-term gains; a long-term loss can be set off only against long-term gains. Anything unused carries forward for up to eight assessment years – but only if you file your income tax return by the due date. Miss the deadline and the carry-forward is forfeited.
Related NYVO guides
- Taxation of Mutual Funds in India: Every Category, One Playbook – how equity, debt, hybrid and gold funds each fall under these capital gains rules.
- How Gold Is Taxed in India – physical gold, gold funds and ETFs, and where each sits after Budget 2024.
- Advance Tax: Who Pays, When, and How Much – a large capital gain can push you past the ₹10,000 line and trigger advance-tax instalments.
Capital gains tax rewards patience with a lower rate and a yearly equity exemption, but it turns on details – the asset, the holding period, the purchase date. Get those three right on paper before you sell, and the number stops being a surprise.
