Capital Gains Tax India 2026 — the honest guide for stocks, property, mutual funds

The July 2024 budget rewrote the rulebook. Two ITR cycles later, the dust has finally settled — and the picture for FY 2025-26 is the cleanest it's been. This is what actually changed, what your CA might still be getting wrong, and how to think about each asset class when the cheque clears.

By Sibin O · Founder, NagrikIQ · Bengaluru · Published 12 August 2026

A real story. My friend Rahul sold his Bengaluru flat in HSR Layout in March 2025 — bought it in late 2016 for ₹62 lakh, sold for ₹1.42 crore. Held for 8 years. His CA — perfectly competent, twenty years in practice — told him flatly, "Indexation gives you a lower tax, take the 20% route." Rahul almost signed off. He didn't, because he ran the numbers on the back of a Zomato receipt at lunch.

Indexed cost (using CII 363 for 2024-25 against 264 for 2016-17): roughly ₹85.2 lakh. Indexed gain: ₹56.8 lakh. Tax at 20%: ₹11.36 lakh. Unindexed gain: ₹80 lakh. Tax at 12.5% under the new regime: ₹10 lakh. He saved ₹1.36 lakh by ignoring his CA. The lesson isn't that CAs are wrong — it's that the 2024 changes broke a lot of muscle memory. The default answer from before is the wrong default now.

What actually changed on 23 July 2024

The Finance (No. 2) Act 2024 did four things on the same day, and they need to be understood together — not as four unrelated tweaks.

1. Equity LTCG raised from 10% to 12.5%, and the annual exemption raised from ₹1 lakh to ₹1.25 lakh. The exemption hike is generous on the surface — ₹3,125 of saved tax per year for active investors — but the rate hike on big gains dwarfs it.
2. Equity STCG raised from 15% to 20%.This one stung. Frequent traders, F&O-adjacent investors, and short-term swing players all took a 33% proportional hit on their tax bill.
3. Indexation removed on real estate, gold, unlisted shares, and non-equity assets — replaced by a flat 12.5% LTCG. After two months of outcry, the government grandfathered residents who bought property before 23 July 2024 — they get a choose-the-lower-of option between the new 12.5% (no indexation) and the old 20% (with indexation). This grandfathering does not extend to gold, unlisted shares, or NRIs.
4. Holding periods harmonised. Everything listed is now long-term at 12 months; everything else is long-term at 24 months. The 36-month bucket (which used to cover gold and debt funds) is gone.

Asset-class breakdown — FY 2025-26 onwards

Every rate below assumes transfer on or after 23 July 2024. For transfers before that date, refer to the AY 2024-25 rate card.

Listed equity shares & equity mutual funds

Holding period: ≤ 12 months = short-term; > 12 months = long-term
Short-term: 20% flat (was 15% before 23-Jul-2024)
Long-term: 12.5% on gains above ₹1.25L per year (was 10% over ₹1L)

STT must have been paid. ₹1.25L exemption is per PAN, per year — not per fund.

Debt mutual funds (purchased on/after 1-Apr-2023)

Holding period: No long-term concept anymore
Short-term: Taxed at your slab rate
Long-term: Taxed at your slab rate (Finance Act 2023 killed LTCG here)

Units bought before 1-Apr-2023 retain the old 20%-with-indexation LTCG treatment if held > 36 months.

Real estate (land, flat, plot)

Holding period: ≤ 24 months = short-term; > 24 months = long-term
Short-term: Slab rate
Long-term: 12.5% without indexation — OR — 20% with indexation if purchased before 23-Jul-2024 (grandfathering)

Grandfathering applies only to resident individuals/HUFs and only for property acquired before 23-Jul-2024.

Unlisted shares (including foreign equities)

Holding period: ≤ 24 months = short-term; > 24 months = long-term
Short-term: Slab rate
Long-term: 12.5% without indexation

ESOPs from foreign parents fall here. RSUs from US companies — same rule.

Physical gold, gold ETFs (non-equity), gold funds

Holding period: ≤ 24 months = short-term; > 24 months = long-term
Short-term: Slab rate
Long-term: 12.5% without indexation (post 23-Jul-2024)

Sovereign Gold Bonds are taxed differently — see next row.

Sovereign Gold Bonds (SGBs)

Holding period: 8-year tenure; exit window from year 5
Short-term: Slab rate if sold within 12 months
Long-term: 12.5% without indexation if sold after 12 months on exchange; tax-free if redeemed at maturity

The maturity exemption is the single best feature of SGBs. Don't sell on exchange unless you must.

Crypto / VDAs

Holding period: Irrelevant — no STCG/LTCG distinction
Short-term: 30% flat (Section 115BBH)
Long-term: 30% flat

1% TDS on every transfer above ₹10,000. Losses cannot be set off against anything — not even other crypto.

Editorial — my take

The 2024 capital-gains overhaul is the single most consequential tax change for middle-class Indian investors in a decade. The government framed it as simplification — and to be fair, having uniform 12 / 24-month holding periods and one flat LTCG rate is simpler. But the people who paid for that simplification are owners of slow-appreciating property in tier-2 cities and long-tenure SGB sellers. The grandfathering on property looks generous, but it quietly excludes NRIs and HUFs that purchased after July 2024 — exactly the segment that buys most premium real estate in Bengaluru, Mumbai, and Pune. Don't read the press release. Read the comparison.

— Sibin O, Founder, NagrikIQ · Bengaluru

The three exemptions that actually matter

Sections 54, 54EC, and 54F are the only meaningful ways to legitimately defer or extinguish capital gains tax. Everything else you've heard about (HUF gifting, family arrangements, gifting to parents) is either tax planning at the margin or outright risky. Understand these three properly first.

Section 54

When: When you sell a residential house and reinvest in another residential house.

Cap: Exemption capped at ₹10 crore (capped from AY 2024-25 onwards).

Window: Purchase within 1 year before or 2 years after sale, or construct within 3 years.

Watch out: Park unutilised amount in a Capital Gains Account Scheme (CGAS) with a public sector bank before the ITR due date.

Section 54EC

When: For LTCG from land or building — invest in REC, NHAI, PFC, IRFC bonds.

Cap: ₹50 lakh maximum, per financial year per assessee.

Window: Within 6 months of sale.

Watch out: Bonds lock-in for 5 years. Interest is taxable. Yields hover around 5.25%–5.5% — modest, but the tax saved usually outweighs the opportunity cost for big gains.

Section 54F

When: For LTCG from any capital asset other than a residential house (think: equity, gold, land) when you reinvest the entire net sale consideration in one residential property.

Cap: Also ₹10 crore cap. You cannot own more than one other residential house on the date of transfer.

Window: Same window as Section 54 — 1 year before, 2 years after, or 3 years to construct.

Watch out: If you reinvest only part of the proceeds, exemption is proportionate. This trips up most people.

Tax-loss harvesting — the ₹1.25 lakh annual reset

Here's the move every equity investor should make in the last week of March, every year, without exception. Look at your long-term equity holdings. Identify positions that, if sold today, would generate a long-term capital gain of up to ₹1.25 lakh in aggregate for the financial year. Sell them. Wait one trading day. Buy them back. You've just paid ₹0 in tax and stepped up your cost basis by ₹1.25 lakh.

Done every year for 10 years, that's ₹12.5 lakh of cost-basis uplift — which, assuming you would have eventually realised those gains, saves roughly ₹1.56 lakh in tax at the new 12.5% rate. The Income Tax Act doesn't have a wash-sale rule like the US does. Selling and rebuying is fully legal. Just don't do it on the same day on the same exchange — settle the trade properly.

The mirror image: if you have realised gains of ₹3 lakh and unrealised losses of ₹2 lakh, book the losses before 31 March. Long-term losses set off against long-term gains; short-term losses set off against either. Carry-forward is allowed for 8 assessment years — but only if you file your ITR before the due date. Late filers lose the carry-forward.

The real holding-period math — when waiting actually pays

For listed equity, the difference between selling on day 364 and day 366 is the difference between 20% STCG and 12.5% LTCG. On a ₹5 lakh gain, that's ₹37,500 saved by waiting two days. Most people know this. What they don't realise is the same trick rarely works for property: on real estate, short-term means slab-rate-of-up-to-30%, long-term means 12.5% — a much wider gap, and the holding period is 24 months, not 12. Selling a flat at 22 months versus 25 months can be the difference between paying ₹15 lakh and ₹6 lakh on the same transaction. Patience compounds.

ITR-season checklist for FY 2025-26

Pull your AIS and 26AS — don't trust your broker's statement alone. Reconcile every single transaction.
Split your equity capital gains into pre-23-Jul-2024 and post-23-Jul-2024 buckets. ITR-2 has separate fields.
If you sold property, decide the indexation question before filing — once filed, the choice locks in for that property.
If exemption is claimed but reinvestment isn't yet done, deposit in a Capital Gains Account Scheme account before the ITR due date.
Carry forward losses by filing before the due date. A single day late costs you the carry-forward.
Pay advance tax in the instalment following the sale — don't wait till 15 March.

Editorial — uncomfortable truth

Crypto tax is punitive on purpose. 30% flat, 1% TDS on every transfer, no set-off of losses — this is policy designed to discourage retail participation, not to collect revenue. I think it's bad policy, both because it pushes activity offshore (where it isn't tracked) and because it treats a ₹500 college student trade with the same instrument as a ₹50 lakh institutional trade. That's my opinion, not advice. The law is what it is. If you trade crypto, keep impeccable records — the IT department's intent-to-prosecute on under-reporting has visibly hardened in the last two assessment cycles.

— Sibin O, Founder, NagrikIQ · Bengaluru

Common questions

I sold equity mutual funds in May 2024 — which rate applies, old or new?

The new rate (12.5% LTCG / 20% STCG) only applies to transfers on or after 23 July 2024. Anything sold on or before 22 July 2024 follows the old rates — 10% LTCG over ₹1 lakh, 15% STCG. The cut-off is the date of transfer, not the date of credit to your bank. Brokers were supposed to split the gain reports in two halves; check your AIS carefully.

I bought a flat in Pune in 2018 and sold it in 2025. Should I pick 12.5% without indexation or 20% with indexation?

Run both numbers. The indexation route wins when the property appreciated only modestly — roughly tracking inflation. The 12.5% flat rate wins when the property doubled or more. Rough rule of thumb: if your gain is more than ~2× the indexed gain, 12.5% is better; if barely above inflation, indexation wins. CAs who default to 'always indexation' are stuck in pre-2024 thinking. Compute, don't assume.

Does the ₹1.25 lakh LTCG exemption on equity reset every financial year?

Yes. It's a per-financial-year, per-PAN exemption. This is the foundation of tax-loss harvesting — at the end of each FY, you can sell equity holdings up to ₹1.25 lakh of gains, repurchase them immediately, and reset your cost basis at zero tax cost.

I have crypto losses. Can I set them off against my equity gains?

No. Crypto (VDA) losses cannot be set off against any income — not equity gains, not other crypto gains, not even crypto gains in the next year. The Section 115BBH framework is brutally one-way. If you've been told otherwise, you've been told wrong.

Do I need to pay advance tax on capital gains?

Yes, but only after the gain has actually arisen. Capital gains are an exception to the strict advance-tax instalment schedule — you pay advance tax in the instalment that falls after the sale date. Miss it, and 234C interest at 1% per month kicks in.

If I sell my flat and reinvest in two flats, can I claim Section 54 for both?

Once in a lifetime, yes — if the LTCG is up to ₹2 crore, you can split the reinvestment across two residential houses. This is the 'two-house option' added to Section 54. After using it once, you're back to one-house-per-sale forever.

Are NRI capital gains taxed at the same rates?

Rates are the same, but TDS is much harsher for NRIs — 20% on listed equity LTCG (without the ₹1.25L threshold at TDS stage; you claim it back via ITR), 12.5% on real estate LTCG TDS (after the buyer files Form 27Q). The grandfathering for property is available to resident individuals and HUFs only — NRIs do not get the 20%-with-indexation option.

I'm a salaried employee with one stock sale. Can I still use ITR-1?

No. The moment you have any capital gains — even ₹100 — ITR-1 is out. You'll file ITR-2 (or ITR-3 if you also have business income). The ITR-2 capital gains schedule is the part where people make the most errors; double-check the section that asks for date-wise gain split around 23-Jul-2024.

What's tax-loss harvesting and is it worth the trouble?

It's the practice of deliberately selling losing positions before 31 March to book losses that offset other capital gains, then optionally repurchasing the same security a few days later. For someone with ₹5–10 lakh of realised equity gains, harvesting ₹2 lakh of paper losses can save ~₹25,000 in tax. The bookkeeping is mild. It's worth it from roughly ₹1.5 lakh gains upward.

Related guides on NagrikIQ

Income Tax India — full overview — slabs, regimes, surcharges for FY 2025-26.
How to file your ITR (ITR-1 to ITR-3) — the schedule-by-schedule walkthrough.
Income tax deductions — 80C, 80D, and beyond — what survives in the new regime and what doesn't.

This guide is general commentary, not personalised tax advice. Tax outcomes depend on individual facts. For decisions involving more than ₹10 lakh of gain, please consult a chartered accountant. The author is the founder of NagrikIQ and writes from Bengaluru.