The fundamentals
Capital gain = sale price − acquisition cost (with adjustments). The tax rate depends on (a) the asset class and (b) how long you held it (Short-Term vs Long-Term).
Holding-period thresholds: 12 months for listed securities (equity shares, equity MFs, REITs, InvITs), 24 months for everything else (debt MFs, gold, real estate, unlisted shares).
STCG rates depend on asset class. LTCG is now uniform at 12.5% for most assets — but with the loss of indexation for property and debt MFs (a major hit for long-held property).
FY 2025-26 capital-gains rates by asset class
Holding-period threshold and STCG / LTCG rates · post-Budget 2024
| Asset class | LTCG threshold | STCG rate | LTCG rate |
|---|---|---|---|
| Listed equity / equity MFs | > 12 months | 20% | 12.5% on gains > ₹1.25L/yr |
| Debt mutual funds | n/a (no LTCG) | Slab rate | Slab rate (no indexation) |
| Real estate (post-Jul-2024) | > 24 months | Slab rate | 12.5% (no indexation) |
| Real estate (pre-Jul-2024) | > 24 months | Slab rate | 12.5% OR 20% w/ indexation |
| Gold (physical, ETF) | > 24 months | Slab rate | 12.5% (no indexation) |
| Sovereign Gold Bonds (matured) | 8 years held | — | 0% if held to maturity |
| Unlisted shares | > 24 months | Slab rate | 12.5% (no indexation) |
| REITs / InvITs (listed) | > 12 months | 20% | 12.5% on gains > ₹1.25L/yr |
STCG = held BELOW threshold; LTCG = held ABOVE. ₹1.25L LTCG exemption is for LISTED equity + REITs only (not foreign equity, not debt). Indexation removed for property (Budget 2024) + debt MFs (Budget 2023). Pre-Jul-2024 property retains the indexation OPTION at the seller's choice.
What Budget 2024 actually killed
Two things: (a) indexation on real estate sold from 23-Jul-2024 onwards — flat 12.5%, no inflation adjustment; (b) the ₹1L LTCG exemption raised to ₹1.25L but STCG on equity bumped from 15% to 20%. For high-frequency equity traders, the STCG hike hurts more than the LTCG threshold helps.
Tax-harvesting the ₹1.25L LTCG exemption
Sell + immediately re-buy equity MF units once a year to realise ₹1.25L of gain at 0% tax + reset your acquisition cost higher. Net annual benefit: ~₹15-25K for 30%-bracket investors. Only works in direct funds without exit load.
Worked example
Sold ₹6L of equity MF gains in FY 25-26 (held 3 years), and ₹4L of debt MF gains (held 4 years).
Equity MF gain ₹6L
Exemption: first ₹1.25L is free. Taxable: ₹4.75L at 12.5% = ₹59,375. Plus 4% cess = ₹61,750.
Debt MF gain ₹4L
Treated as ordinary income at slab rate. If you're in the 30% bracket: tax = 30% × ₹4L = ₹1,20,000 + 4% cess = ₹1,24,800.
Total capital-gains tax: ~₹1,86,500. The debt-MF tax is 3× higher per rupee of gain than the equity-MF tax — Budget 2023 + 2024 erased the tax case for debt MFs.
FY 2025-26. Surcharge omitted. Sajag computes capital-gains schedules directly from your CAS (NSDL/CDSL) every month.
Important caveats
Indexation removal for property bought before 23-July-2024: you can OPT for 20% LTCG WITH indexation, OR 12.5% LTCG WITHOUT — whichever is lower. For property held 15+ years, indexation usually wins; for shorter holds, the flat 12.5% is better.
LTCG exemption ₹1.25L is per FY, not per asset. Spread sales across years to use the exemption multiple times.
Set off rules: STCG can offset against STCL (short-term loss); LTCG only against LTCL. Equity STCL can offset against ANY capital gain. Debt-MF gains, being slab-rate, can't be offset by capital losses.
Carry-forward: capital losses carry forward 8 years. File the loss in ITR even if no gain — losing this carry-forward is a common mistake.
Buyback of shares: pre-July-2024 buybacks were tax-free for the seller. Post-July-2024 buyback proceeds are taxed as DIVIDEND (slab rate) — fundamentally different treatment. Sajag flags this in transaction histories.
Common questions
Why did my SIP-bought ELSS units get LTCG 12.5% even though I held them only 3 years?
ELSS has a 3-year lock-in PER installment. After the lock-in, gains on those units qualify for LTCG (>12 months). 12.5% kicks in on aggregate equity-MF + share LTCG above ₹1.25L per year.
I held a debt MF for 5 years — surely indexation applies?
Not anymore. Budget 2023 removed indexation for debt MFs purchased on/after 1-April-2023. Budget 2024 confirmed slab-rate taxation. Holding period for debt MFs no longer changes the rate.
I have ₹20L of unrealised gains in my MF portfolio. Should I book to use the ₹1.25L exemption?
Maybe. Selling and re-buying immediately ('tax harvesting') realises ₹1.25L of gain at 0% tax + lets you re-establish a higher acquisition cost. Costs: STT on sell + buy, exit load (if any), 1-day market movement. Net benefit is ~₹15K-25K per year for a 30%-bracket taxpayer — worth doing if your fund is direct + no exit load.
Are SGB (Sovereign Gold Bond) gains really zero tax?
Held to MATURITY (8 years): yes, exempt under Section 47(viic). Premature exit on secondary market: LTCG 12.5% (no indexation) if > 24 months, slab rate if ≤24 months. The 2.5% annual interest is taxable at slab rate every year.
How does Sajag track capital gains?
From your monthly CAS (NSDL/CDSL Consolidated Account Statement), Sajag reads every redemption with acquisition date and computes STCG/LTCG per the 2024 rules. Equity LTCG exemption ₹1.25L is tracked across the FY. The capital-gains ledger is ready when you file.
When this doesn’t apply
- • You hold property bought before April-2001 — special grandfathering applies (use 1-Apr-2001 fair-market value as cost basis). The math gets nuanced; Sajag's property module handles it, but a CA review on first sale is wise.
- • You have foreign-listed securities — DTAA + Schedule FA complications sit outside this guide. Different rules entirely.
Related guides
From article to your numbers
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