>12 months = LTCG, ≤12 months = STCG
Capital Gain ()
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Taxable Gain
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Tax
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Net Profit (After Tax)
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Tax Rates (Effective 23 July 2024)
- • Equity/Equity MF LTCG: 12.5% (above ₹1.25L)
- • Equity/Equity MF STCG: 20%
- • Debt MF: Taxed as per slab (assumed 30%)
About Capital Gains Tax
Capital gains tax applies when you sell capital assets like stocks, mutual funds, or property at a profit. In India, the tax rate depends on the asset type and holding period (LTCG for long-term, STCG for short-term).
Current Rules (Effective 23 July 2024)
- Equity/Equity MF LTCG (>12 months): 12.5% on gains above ₹1.25 lakh/year
- Equity/Equity MF STCG (≤12 months): 20% flat
- Debt MF LTCG (>24 months): Taxed as per your income tax slab (no indexation benefit from FY 2023-24)
- Debt MF STCG (≤24 months): Taxed as per your slab
Example
Buy equity at ₹1L, sell at ₹2L after 24 months → Gain ₹1L (LTCG). Tax-free up to ₹1.25L, so no tax. Net profit = ₹1L.
Updated: October 2026
Tax Rules: As per Union Budget 2024 (effective 23 July 2024)
Note: For debt MF, tax rate assumes 30% slab. Actual tax depends on your income.
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Frequently Asked Questions
What is the difference between LTCG and STCG?
Long-Term Capital Gains (LTCG) apply when you sell an asset after holding it beyond a threshold period. Short-Term Capital Gains (STCG) apply if sold before that. For equity/equity MF: >12 months = LTCG, ≤12 months = STCG. For debt MF: >24 months = LTCG (now taxed as per slab, no indexation from FY 2023-24), ≤24 months = STCG (taxed per slab).
What are the current capital gains tax rates?
Effective 23 July 2024: Equity/Equity MF LTCG: 12.5% on gains above ₹1.25 lakh/year. Equity/Equity MF STCG: 20% flat. Debt MF (both LTCG & STCG): Taxed as per your income tax slab. These rates changed in Union Budget 2024. Earlier, equity LTCG was 10% above ₹1L and STCG was 15%.
Is the ₹1.25 lakh exemption per year or lifetime?
The ₹1.25 lakh LTCG exemption for equity/equity MF is per financial year (April-March), not lifetime. You can use this exemption every year. If your total LTCG in FY 2025-26 is ₹2 lakh, you pay 12.5% tax only on ₹75,000 (₹2L - ₹1.25L). Next year, you get another ₹1.25L exemption.
How do I minimize capital gains tax?
Strategies: (1) Hold equity >12 months to get LTCG rate + ₹1.25L exemption instead of 20% STCG. (2) Spread sales across financial years to use ₹1.25L exemption multiple times. (3) Harvest losses: sell loss-making stocks to offset gains. (4) For debt funds, time sales in low-income years to reduce slab rate. (5) Use equity MF SWP instead of lump sum redemption to spread gains over years.
Do I need to pay advance tax on capital gains?
Yes, if your total tax liability (including capital gains tax) exceeds ₹10,000 in a financial year, you must pay advance tax. Capital gains must be included in advance tax calculation. Advance tax is paid in installments: 15% by Jun 15, 45% by Sep 15, 75% by Dec 15, 100% by Mar 15. Failure to pay attracts interest under Section 234B and 234C.
Are STT-paid transactions exempt from tax?
No, STT (Securities Transaction Tax) is a separate transaction tax paid when buying/selling listed securities. It does NOT exempt you from capital gains tax. However, equity LTCG exemption (₹1.25L) and lower LTCG rates (12.5%) apply only to STT-paid transactions on recognized stock exchanges. Off-market equity transfers don't get these benefits and are taxed at 20% with indexation.