How are capital gains taxed in India?

By the India Law Simplified editorial team · Verified against the bare Acts & official portals · Updated 2026-07-28 · ~4 min read

⚡ Quick answer

Capital gains tax depends on the asset and how long you held it. For listed shares and equity mutual funds, gains within 12 months are short-term (STCG), taxed at 20%; beyond 12 months they are long-term (LTCG), taxed at 12.5% on the amount above a ₹1.25 lakh annual exemption. Property and unlisted assets held over 24 months are long-term, taxed at 12.5% (with a grandfathering option for older property). The rules changed for transfers on or after 23 July 2024.

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Capital gains tax is the tax on the profit you make when you sell an asset — shares, mutual funds, property, gold or crypto. India taxes them very differently depending on what you sold and how long you held it, and the rules were overhauled in July 2024. This guide breaks down the rates clearly, with the holding periods that decide short-term vs long-term, the ₹1.25 lakh equity exemption, the rules for property, and worked examples.

1Short-term vs long-term — it's about holding period

Every capital gain is either short-term or long-term, decided by how long you held the asset before selling. The dividing line differs by asset:

Listed shares & equity mutual funds: long-term after 12 months
Immovable property (land/building) & unlisted shares: long-term after 24 months
Other assets (gold, debt funds bought before Apr 2023, etc.): generally long-term after 24 months

⚠️ ImportantThese holding-period and rate rules apply to transfers made on or after 23 July 2024. Earlier transfers followed the old rates and indexation rules.

2Listed shares and equity mutual funds

This is what most retail investors deal with:

Short-term (held under 12 months): taxed at 20% (Section 111A)
Long-term (held over 12 months): taxed at 12.5% on gains above ₹1.25 lakh per financial year (Section 112A)
Securities Transaction Tax (STT) must have been paid for these concessional rates to apply

💡 ExampleYou sell equity mutual funds after 2 years with a ₹3 lakh long-term gain. The first ₹1.25 lakh is exempt, leaving ₹1.75 lakh taxable at 12.5% = ₹21,875 (plus cess). If instead you'd sold within 12 months, the whole ₹3 lakh would be short-term, taxed at 20% = ₹60,000.

3Property and other assets

For immovable property and unlisted assets held over 24 months, the long-term rate is 12.5%. A special rule applies to property bought before 23 July 2024: you can choose whichever is lower — 12.5% without indexation, or 20% with indexation (which adjusts your purchase cost for inflation).

You can also save tax on property gains by reinvesting under Sections 54/54F (in another house) or 54EC (in specified bonds, up to ₹50 lakh).

4Debt funds, gold and crypto

A few asset classes have their own rules:

Debt mutual funds bought on/after 1 April 2023: taxed entirely at your slab rate (no LTCG benefit).
Gold and gold funds: long-term after 24 months, taxed at 12.5%.
Crypto/VDAs: a separate flat 30% under Section 115BBH — not treated as normal capital gains, with no loss set-off.

Capital gains tax rates (transfers on/after 23 July 2024)
Asset	Short-term	Long-term
Listed shares / equity MF	20% (<12 months)	12.5% above ₹1.25L (>12 months)
Immovable property	Slab rate (<24 months)	12.5% (>24 months); grandfathering for old property
Unlisted shares	Slab rate (<24 months)	12.5% (>24 months)
Debt MF (bought after Apr 2023)	Slab rate	Slab rate (no LTCG benefit)
Crypto / VDA	30% flat	30% flat (Section 115BBH)

Key takeaways

Capital gains are short-term or long-term based on the holding period, which varies by asset.
Listed equity/MF: 20% STCG (<12 months); 12.5% LTCG above ₹1.25 lakh/year (>12 months).
Property/unlisted: long-term after 24 months at 12.5%; old property gets a 12.5%-vs-20%-with-indexation choice.
Debt funds bought after April 2023 are taxed at your slab; crypto is a flat 30%.
Property gains can be saved by reinvesting under Sections 54, 54F or 54EC.

Frequently asked questions

What is the LTCG exemption on shares?

Long-term capital gains on listed equity and equity mutual funds are exempt up to ₹1.25 lakh per financial year under Section 112A. Gains above that are taxed at 12.5% (plus cess).

What is the difference between STCG and LTCG?

STCG (short-term capital gain) is profit on an asset held for a short period — taxed higher (20% for listed equity, or slab rate for others). LTCG (long-term) is profit on an asset held longer — taxed at the concessional 12.5% with exemptions. The holding period that divides them depends on the asset.

How can I save tax on capital gains from selling property?

Reinvest the gain in another residential house under Section 54/54F, or invest up to ₹50 lakh in specified NHAI/REC bonds under Section 54EC within 6 months. If you can't reinvest before filing, park the gain in a Capital Gains Account Scheme.

Is there any tax-free limit on short-term gains?

No special exemption like the ₹1.25 lakh LTCG one — but short-term gains are part of your total income, so the basic exemption limit still applies. For listed equity, STCG is taxed at the flat 20% rate under Section 111A.