Capital Gains Tax Rules India: LTCG, STCG & Section 54 Exemptions (FY 2026-27)
Capital gains tax is levied on the profit realized from the sale of capital assets, classified into Short-Term Capital Gains (STCG) or Long-Term Capital Gains (LTCG) based on statutory holding periods. Under current tax provisions, Long-Term Capital Gains on listed equities and equity mutual funds are taxed at 12.50% on gains exceeding ₹1,25,000 per financial year, while Short-Term Capital Gains are taxed at 20.00%.
For unlisted shares, real estate, and physical gold, LTCG is standardized at 12.50% without indexation, though property acquired before July 23, 2024 retains an option to compute tax at 20% with indexation if beneficial to individual residents.
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1. Capital Gains Tax Rates Across Asset Classes
| Asset Class | Holding Period for LTCG | Short-Term Tax Rate (STCG) | Long-Term Tax Rate (LTCG) | Annual Exemption Limit |
|---|---|---|---|---|
| Listed Equity & Equity Mutual Funds | More than 12 Months | 20% (Section 111A) | 12.5% (Section 112A) | ₹1,25,000 / year |
| Unlisted Equity Shares | More than 24 Months | Taxed at Slab Rate | 12.5% (Section 112) | Nil |
| Real Estate (Land & Building) | More than 24 Months | Taxed at Slab Rate | 12.5% (Without indexation) | Nil |
| Physical Gold / Jewellery | More than 24 Months | Taxed at Slab Rate | 12.5% (Without indexation) | Nil |
| Debt Mutual Funds (post-April 2023) | Always Short-Term | Taxed at Slab Rate | Taxed at Slab Rate | Nil |
Note: Surcharge and 4% Health & Education Cess apply on all capital gains tax obligations.
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2. Worked Example: Equity LTCG Calculation
Suppose an investor sells equity shares realizing a net capital gain of ₹3,00,000:
1. Total Realized Long-Term Gain: ₹3,00,000
2. Statutory Annual Exemption (Section 112A): -₹1,25,000
3. Taxable Long-Term Gain: ₹1,75,000
4. Base Tax (12.5% of ₹1,75,000): ₹21,875
5. Health & Education Cess (4%): ₹875
6. Total Capital Gains Tax Payable: ₹22,750 (Effective tax rate: 7.58% on total profit)
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3. Reinvestment Exemptions on Real Estate Gains
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Frequently Asked Questions
Can capital losses be set off against capital gains?
Short-term capital losses can be set off against both short-term and long-term capital gains. However, long-term capital losses can only be set off against long-term capital gains. Unadjusted losses can be carried forward for up to 8 assessment years, provided the ITR is filed on or before the due date.Does the ₹1.25 Lakh LTCG exemption apply to real estate or gold?
No. The ₹1.25 Lakh annual tax exemption under Section 112A applies exclusively to listed equity shares, equity-oriented mutual fund units, and business trust units subject to Securities Transaction Tax (STT).⚡ Try the Interactive Tool
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