Capital Gains Tax India — LTCG, STCG, Rates & Exemptions

Last updated: 14 Oct 2026

Quick Answer: The Finance Act 2024 revised capital gains tax rates effective July 23, 2024. Long-term capital gains generally attract a 12.5% rate. Property acquired before July 23, 2024, allows a choice between 12.5% without indexation or 20% with indexation. Various exemptions, such as Section 54 for residential property reinvestment, are available.

Complete guide to capital gains tax in India for FY 2024-25. LTCG on equity, property, mutual funds, unlisted shares. Indexation, Section 54 exemptions, and tax planning.

Capital Gains Tax in India — FY 2024-25 Framework

The Finance Act 2024 made significant changes to capital gains tax rates in India, effective July 23, 2024. Understanding these changes is critical for tax planning on property, equity, mutual funds, unlisted shares, and other capital assets. This guide covers all the key rates, holding periods, exemptions, and planning strategies.

Capital Gains Tax Rates — FY 2024-25 At a Glance

Asset Type	LTCG Rate	STCG Rate	Holding for LTCG	Indexation
Listed equity shares	12.5% (above ₹1.25L)	20%	12 months	No
Equity Mutual Funds	12.5% (above ₹1.25L)	20%	12 months	No
Debt Mutual Funds (post Apr 2023)	Slab rate	Slab rate	N/A (always STCG)	No
Immovable Property (pre-Jul 23, 2024 purchase)	12.5% or 20%+index (whichever lower)	Slab rate	24 months	Optional
Immovable Property (post-Jul 23, 2024 purchase)	12.5%	Slab rate	24 months	No
Unlisted shares	12.5%	Slab rate	24 months	No
Gold / Jewellery	12.5%	Slab rate	24 months	No
Bonds (listed)	10% (no indexation)	Slab rate	12 months	No

Property Capital Gains — The Indexation Question

The Finance Act 2024 generated significant controversy by removing indexation for property sales from July 23, 2024 onwards. However, for properties acquired before July 23, 2024, taxpayers can choose the lower of:

12.5% on gains without indexation, OR
20% on gains with CII (Cost Inflation Index) indexation

The choice is made at the time of filing the return. For most long-held properties (15–20 years), indexation at 20% often results in lower tax than 12.5% without indexation due to significant inflation adjustment.

Example Calculation

	Without Indexation (12.5%)	With Indexation (20%)
Purchase price (FY 2005-06)	₹30 lakh	₹30 lakh
CII 2005-06 / 2024-25	—	117 / 363 = 3.10x
Indexed cost	₹30 lakh (no indexation)	₹93 lakh
Sale price	₹1.5 crore	₹1.5 crore
LTCG	₹1.2 crore	₹57 lakh
Tax	₹15 lakh	₹11.4 lakh
Better option		Indexation wins

Key Exemptions from LTCG

Section 54 — Residential Property Reinvestment

If you sell a residential house and invest the LTCG in one new residential property (purchased 1 year before / 2 years after sale, or constructed within 3 years), the LTCG is exempt. Key conditions:

Maximum exemption = cost of new house
If new house is sold within 3 years, original exemption is withdrawn
One new house only (cannot split between two properties)
You can own one other residential house at the time of sale

Section 54F — Non-Residential Asset Sale

Selling shares, gold, commercial property? If you are not already owning more than one residential house, invest the entire net consideration (not just gains) in one new residential house within the prescribed period, the entire LTCG is exempt. If only a part of the net consideration is reinvested, proportionate exemption is given.

Section 54EC — Infrastructure Bonds

Invest up to ₹50 lakh in NHAI or REC bonds within 6 months of sale. Bonds have a 5-year lock-in. Exemption up to ₹50 lakh of LTCG. No exemption if bonds are sold or pledged within 5 years.

Section 54GB — Investment in Startups

LTCG from sale of residential property can be exempted if invested within 6 months in equity shares of an eligible startup (DPIIT-recognised) and the startup uses the funds to purchase assets (machinery, not land) within 1 year of investment. Sunset clause has been extended periodically — check current FY applicability.

Capital Gains from Startup Shares — Special Rules

Shares received in ESOPs: Exercise price is cost of acquisition. FMV at exercise date is perquisite income (not capital gains). Capital gains arise only on subsequent sale of shares — from exercise date at exercise price as cost.
Shares received on bonus: Cost of original shares apportioned to bonus shares. Holding period starts from original allotment date.
Shares received via rights issue: Rights issue price is cost; date of allotment in rights is start of holding period.
Conversion of CCPS / CCD to equity: Deemed acquisition at cost of convertible instrument; holding period starts from allotment of convertible instrument (not conversion date) per Finance Act 2024 clarification.

Capital Gains Tax Planning Strategies

Harvest LTCG up to ₹1.25 lakh annually — tax-free on listed equity; sell and re-buy to "step up" cost basis
Choose indexation vs. no-indexation for property sold before July 23, 2024 acquisition — always compute both
Section 54 reinvestment planning — plan new property purchase timeline around sale date
Set off capital losses — LTCL set off against LTCG; STCL against both STCG and LTCG (within the same head)
Spread gains across family members (if gifted assets) — gifts to spouse are clubbed, but gains on gifts to children (major) are not
Section 54EC bonds before December 31 of assessment year — pay advance tax to avoid interest under Section 234B/C

Planning a property sale, share exit, or startup founder liquidity event?

Get Capital Gains Tax Planning Advice Call +91-9962 260 333

Frequently Asked Questions

What is the LTCG tax rate on equity shares?

Long-term capital gains (LTCG) on listed equity shares and equity mutual funds exceeding ₹1.25 lakh in a financial year are taxed at 12.5% (without indexation benefit) as per Finance Act 2024. Gains up to ₹1.25 lakh are exempt. STCG on equity is taxed at 20%.

What is the LTCG tax on property sale?

LTCG on property (held more than 24 months) is taxed at 12.5% without indexation, or at 20% with indexation (Cost Inflation Index), whichever the taxpayer chooses, for properties acquired before July 23, 2024. For properties acquired after July 23, 2024, indexation is not available — flat 12.5% applies.

What exemptions are available on LTCG from property sale?

Section 54: Invest LTCG in one residential house (purchased within 1 year before or 2 years after, or constructed within 3 years). Section 54F: Invest entire net consideration (not just gains) in one residential house (if you don't own more than one other house). Section 54EC: Invest up to ₹50 lakh in NHAI/REC bonds within 6 months (lock-in 5 years). Section 54GB: Invest in eligible startups (specific conditions).

What is the holding period for Long-Term Capital Gains?

Listed securities (equity, equity MF, listed bonds): 12 months. Unlisted shares, immovable property, jewellery, debt mutual funds: 24 months. Zero Coupon Bonds: 12 months. All others: 36 months.

How is LTCG on unlisted shares calculated?

LTCG on unlisted shares (held more than 24 months) is taxed at 12.5% without indexation. Cost of acquisition for shares received as bonus/split uses the cost of original shares. For ESOPs, cost of acquisition is the exercise price (FMV at grant for cost to company). Grandfathering applies only to listed shares (not unlisted).

What is the tax on LTCG from debt mutual funds?

Debt mutual funds (and funds with equity exposure below 35%) sold after April 1, 2023 are taxed as per slab rate regardless of holding period (STCG treatment for all). This was changed by Finance Act 2023. Before April 2023: LTCG at 20% with indexation for funds held 3+ years.

Is there TDS on capital gains?

For non-residents: TDS at 10%/20% applies on LTCG from sale of property or shares. For residents: No TDS on capital gains from financial instruments. On property sales above ₹50 lakh (resident buyer): TDS at 1% under Section 194IA is deducted by the buyer.

What are the tax consequences of my proposed transaction or income situation?

We need four facts: who you are (resident or not, and your entity type), the tax year, what is being sold or received, and when it was acquired and for how much. From these we work out the head of income, the holding period and whether the gain is short or long term, the rate (for example 12.5% without indexation on most long-term gains from 23 July 2024), any exemption by reinvestment in a house or specified bonds, tax deducted at source, and any treaty relief if you are a non-resident (the Income-tax Act, 1961 for tax years up to 2025-26; the corresponding provisions of the Income-tax Act, 2025 from tax year 2026-27). You receive a written note comparing the lawful options, with the assumptions, the records to keep and the filing steps.

Capital Gains from Partnership Dissolution and LLP

When a partnership firm or LLP is dissolved, partners receive their share of the assets — this is treated as a transfer under Section 45(4) and is taxable as capital gains in the hands of the firm/LLP. The specific provisions post the Finance Act 2021 amendments (introducing Section 9B and Section 45(4)) are complex: Section 9B taxes the distributing entity on the fair market value of capital assets distributed; Section 45(4) determines the partner's capital gains on their share in the firm. Valuations at the time of dissolution are critical.

Capital Gains on Agricultural Land

Agricultural land in India has a special exemption: rural agricultural land (not within 2 km of a municipal limit with population 10,000–99,999, or within 8 km for towns above 1 lakh population) is not a "capital asset" under Section 2(14) — so capital gains tax does not apply. Urban agricultural land, however, is fully taxable. The boundary between "rural" and "urban" agricultural land (the notified limits) frequently changes — verify the current notification for the specific plot's location. Conversion of agricultural land to residential/commercial use triggers capital gains and stamp duty at the development stage.

Indexation Base Year

For assets acquired before April 1, 2001, the cost of acquisition for indexed cost purposes is the higher of: actual acquisition cost, or FMV as on April 1, 2001 (the base year). This is relevant for properties and assets held for decades — getting a valuation certificate of FMV as on April 1, 2001 (from an approved valuer) can significantly increase the indexed cost and reduce taxable capital gains. Once the FMV as on April 1, 2001 is determined, it is multiplied by the CII for the year of sale and divided by 100 (the base year CII).

Reporting Capital Gains in ITR

Capital gains must be reported in the correct ITR form and schedule:

ITR-2: For individuals/HUFs with capital gains (no business income)
ITR-3: For individuals/HUFs with business income and capital gains
ITR-4 (Sugam): Cannot report capital gains — if you have capital gains, must use ITR-2 or ITR-3
Schedule CG in ITR-2/3: Separate sections for short-term and long-term; 111A (equity STCG), 112A (LTCG on equity), 112 (other LTCG), 50C (property sales at below stamp duty value)

Section 50C trap: If you sell property at a price below the stamp duty value (circle rate), the income tax department deems the sale consideration to be the stamp duty value for capital gains computation. The buyer also faces Section 56(2)(x) tax if the purchase price is more than 10% below the stamp duty value.

Related Services

Which laws govern this service? — Income tax

The statutory provisions this service is delivered under, linked to the official text:

What has changed in the law — reviewed October 2026

Income-tax Act, 2025: assented to on 21 August 2025 and in force from 1 April 2026, it replaces the Income-tax Act, 1961 for tax year 2026-27 onward, and the Income-tax Rules, 2026 (notified 20 March 2026) replace the 1962 Rules. Section and rule numbers on this page are those of the 1961 Act and 1962 Rules, which continue to govern assessments, appeals and pending proceedings for assessment years up to 2026-27; for tax year 2026-27 onward the corresponding provisions of the 2025 Act apply, and our engagement letters quote both.