Sold shares, mutual funds or property in FY 2025-26? Your profit is taxed under the simplified capital gains regime introduced on 23 July 2024: a single 12.5% long-term rate for nearly every asset, a 20% short-term rate on listed equity, and a ₹1.25 lakh annual exemption for equity gains. This guide explains the holding periods, rates, indexation choice and exemptions that apply for AY 2026-27.
The framework after 23 July 2024
Before 23 July 2024, long-term capital gains were taxed at different rates for different assets — 10% for listed equity and 20% with indexation for property and gold. The Finance (No. 2) Act, 2024 replaced this patchwork with one uniform structure. For transfers on or after 23 July 2024, most long-term gains are taxed at 12.5% without indexation, no matter which asset you sold.
Gains on transfers completed before 23 July 2024 keep the old rates, while everything from that date onwards follows the new structure.
Holding periods: when does an asset become long-term?
The holding period decides whether your gain is short-term (STCG) or long-term (LTCG). Count the months from the date you acquired the asset to the date you transferred it.
| Asset class | Short-term if held | Long-term if held |
|---|---|---|
| Listed equity shares and equity mutual funds (STT paid) | Less than 12 months | 12 months or more |
| All other assets — property, gold, debt securities, unlisted shares | Less than 24 months | 24 months or more |
The 24-month rule now applies uniformly to immovable property and movable assets alike, replacing the old 24 to 36 month distinctions for property and unlisted shares.
Capital gains tax rates for FY 2025-26 (AY 2026-27)
| Type of gain | Rate | Indexation | Key points |
|---|---|---|---|
| LTCG — listed equity, equity MF units (STT paid) | 12.5% | No | First ₹1.25 lakh per financial year exempt |
| STCG — listed equity, equity MF units (STT paid) | 20% | No | Applies when held under 12 months |
| LTCG — property, gold and most other assets | 12.5% | No | Flat rate, cost deducted without adjustment |
| LTCG — land or building acquired before 23 July 2024 | 12.5% or 20% | Optional | Resident individuals/HUF pick the lower tax |
The indexation choice for property bought before 23 July 2024
If a resident individual or HUF sells land or a building acquired before 23 July 2024, the tax can be computed two ways: at 12.5% without indexation, or at 20% with indexation of the cost. The law lets the taxpayer choose whichever option results in the lower tax. Non-residents do not get this choice — the 12.5% rate without indexation applies to them.
Grandfathering for equity units acquired before 23 July 2024
For listed equity and equity mutual fund units acquired before 23 July 2024 and sold on or after that date, the tax is the lower of two computations: 12.5% without indexation, or 20% with indexation. For the indexed computation, the cost can be substituted with the fair market value (FMV) as on 23 July 2024. This protects investors who bought before the regime change.
Exemptions that can reduce or eliminate LTCG
The 12.5% rate applies only to the gain left after any exemption. Reinvest the gain or the sale proceeds within the prescribed time and the taxable amount shrinks:
- Section 54: sale of a residential house, reinvested in buying or building another residential house in India.
- Section 54EC: invest the gain in NHAI or REC capital gain bonds within six months, up to ₹50 lakh, with a five-year lock-in.
- Section 54F: sale of any long-term asset other than a house, reinvested in one residential house.
- Section 54B: sale of urban agricultural land, reinvested in new agricultural land.
- Section 54D: compulsory acquisition of land or building used for an industrial undertaking, reinvested in new land or building.
Buyback of shares from 1 October 2024
The buyback rule flipped on 1 October 2024. Amounts received by a shareholder on buyback of shares on or after that date are taxed as dividend income at slab rates, not as capital gains. To balance this, the shareholder is allowed the purchase cost of the bought-back shares as a capital loss, which can be set off and carried forward under the normal eight-year rules. Before estimating what you owe, run your numbers through the capital gain tax calculator.
Key takeaways
- One long-term rate — 12.5% without indexation — covers listed equity, property, gold and most other assets for transfers on or after 23 July 2024.
- Equity LTCG enjoys a ₹1.25 lakh annual exemption; equity STCG is taxed at 20% with no exemption.
- Resident individuals and HUFs selling land or buildings bought before 23 July 2024 can still pick 20% with indexation if it lowers the tax.
- Buyback proceeds from 1 October 2024 are dividend income, with the share cost allowed as a capital loss.
- Use exemptions under Sections 54, 54EC, 54F, 54B and 54D before the reinvestment windows close.
Frequently asked questions
What is the LTCG rate on listed shares for FY 2025-26?
Long-term gains on listed equity and equity mutual funds (STT paid) are taxed at 12.5% for AY 2026-27, with the first ₹1.25 lakh of such gains in the financial year exempt. Short-term gains on the same assets are taxed at 20%.
Can I still claim indexation on property sold in FY 2025-26?
Only in one situation: a resident individual or HUF selling land or a building acquired before 23 July 2024 can opt for 20% with indexation instead of 12.5% without it. For every other asset, the flat 12.5% rate applies without any indexation.
How are debt mutual fund gains taxed now?
Units of debt mutual funds purchased on or after 1 April 2023 do not get long-term treatment — gains are added to income and taxed at slab rates. The 12.5% LTCG rate applies to other long-term assets such as property, gold and listed securities.
Where can I compute my capital gains tax?
Use the capital gain tax calculator on taxgst.in to work out LTCG and STCG for each asset. You can then total your income with the income tax calculator or take help from an income tax consultant for large transactions.
Disclaimer: Tax laws change frequently. Verify current rates and deadlines on the official portals (incometax.gov.in, gst.gov.in) or consult a qualified professional before acting.
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