Capital Gains Tax

Tax & Deductions

Capital gains tax is the tax on profit from selling a capital asset (equity, property, gold, debt funds). The tax rate depends on the type of asset and holding period. LTCG (long-term) rates are lower than STCG (short-term), incentivising long-term holding.

In detail

Post-Budget 2024 capital gains rates:nEquity/equity MF:n- STCG (less than 12 months): 20%n- LTCG (12+ months): 12.5%, first Rs 1.25L exempt annuallynDebt MF, FD, bonds:n- All gains at income slab rate (no LTCG benefit)nReal estate:n- STCG (less than 24 months): income slab raten- LTCG (24+ months): 12.5% without indexation (Budget 2024 change)nGold/Gold ETF:n- STCG (less than 24 months): slab raten- LTCG (24+ months): 12.5%nSGB:n- Maturity (8 years): completely tax-free

Formula

LTCG tax (equity) = (Gains - Rs 1.25L) x 12.5%nSTCG tax (equity) = Gains x 20%nReal estate LTCG = Gains x 12.5% (no indexation post-July 2024)

Real-life example

🇮🇳 India example

Rohit sells 3 different assets in FY 2024-25:nEquity fund (held 2 years): Rs 3.5L gain. Tax = (Rs 3.5L - Rs 1.25L) x 12.5% = Rs 28,125nDebt fund (held 3 years): Rs 80,000 gain. Tax at 30% slab = Rs 24,000nFlat (held 3 years): Rs 20L LTCG. Tax = Rs 20L x 12.5% = Rs 2.5LnTotal capital gains tax bill: Rs 2.78L

Frequently asked questions

Can capital gains be offset against capital losses? ▼

Yes. STCG can be set off against STCG or LTCG. LTCG can only be set off against LTCG. Capital losses can be carried forward for 8 years. Tax-loss harvesting: deliberately realise losses in December-March to offset gains from the same year, saving tax.