Written by Sid Joshi
Founder, WorthCheck.in
Capital Gains Tax India 2026: STCG 20% & LTCG 12.5% Complete Guide
Sold stocks, mutual funds, or property? Here's exactly how much tax you owe. This guide covers the new 2024 Budget changes, calculation methods, and exemptions for FY 2026-27.
Key Takeaways for FY 2026-27
- ✓Equity STCG: 20% flat rate (up from 15% post Budget 2024)
- ✓Equity LTCG: 12.5% above Rs 1.25 lakh exemption (up from 10%)
- ✓Debt MFs: Taxed at slab rate (no indexation benefit)
- ✓Property LTCG: 12.5% without indexation OR 20% with indexation (choose lower)
- ✓Exemptions available: Section 54, 54EC, 54F for reinvestment
⚠️ Important Disclaimer
This article is for educational purposes only and should not be considered financial advice. Past performance does not guarantee future results. Mutual fund investments and other financial products are subject to market risks. Please read all scheme information documents carefully before investing. We strongly recommend consulting a certified financial planner (CFP), registered investment advisor (RIA), or qualified financial professional for personalized guidance tailored to your specific financial situation.
Capital gains tax is one of the most confusing aspects of Indian taxation. With the Budget 2024 changes, the rules have shifted significantly - STCG on equity is now 20% (up from 15%), and LTCG is 12.5% (up from 10%).
In this comprehensive guide, I'll break down exactly how capital gains are taxed on different assets - stocks, mutual funds, property, and gold - with real calculation examples.
What is Capital Gains Tax?
Capital gains tax is the tax you pay on the profit from selling a capital asset. A capital asset includes:
STCG vs LTCG: Holding Period Matters
The tax rate depends on how long you held the asset. If you hold it beyond a certain period, it becomes a Long Term Capital Gain (LTCG) with lower tax rates.
| Asset Type | Short Term | Long Term |
|---|---|---|
| Listed Equity Shares | < 12 months | ≥ 12 months |
| Equity Mutual Funds | < 12 months | ≥ 12 months |
| Debt Mutual Funds | < 24 months | ≥ 24 months |
| Real Estate | < 24 months | ≥ 24 months |
| Gold (Physical/Digital) | < 24 months | ≥ 24 months |
| Unlisted Shares | < 24 months | ≥ 24 months |
Capital Gains Tax Rates FY 2026-27
| Asset Type | STCG Rate | LTCG Rate | Exemption |
|---|---|---|---|
| Listed Equity & Equity MFs | 20% | 12.5% | Rs 1.25L/year |
| Debt Mutual Funds | Slab Rate | Slab Rate | None |
| Real Estate | Slab Rate | 12.5%* | Sec 54/54F |
| Gold & Digital Gold | Slab Rate | 12.5% | None |
| Sovereign Gold Bonds (at maturity) | N/A | 0% | Fully Exempt |
*For property: Choose between 12.5% without indexation OR 20% with indexation (whichever is lower)
Stocks & Equity Mutual Funds Taxation
Listed equity shares and equity-oriented mutual funds (where equity exposure is >65%) follow the same tax rules. If you're investing through SIP or lumpsum, understanding these tax implications is crucial for your returns.
Short Term (Held < 12 months)
Flat rate on entire gain. No exemption available.
Long Term (Held ≥ 12 months)
First Rs 1.25 lakh gains per year are tax-free.
Example: LTCG on Equity
Debt Mutual Funds Taxation (New Rules)
Debt mutual funds include liquid funds, overnight funds, debt funds, and hybrid funds with less than 65% equity exposure. This makes fixed deposits and PPF relatively more attractive for conservative investors seeking tax efficiency.
Debt Fund Tax Calculation
Note: Same tax even if held for more than 24 months (no LTCG benefit)
Real Estate Capital Gains Tax
Property gains are complex but offer the best tax-saving opportunities through reinvestment exemptions. If you're deciding whether to rent or buy property, understanding capital gains tax implications should be part of your decision.
Short Term (< 24 months)
Added to income, taxed at slab rate
Long Term (≥ 24 months)
Choose the lower tax:
- • 12.5% without indexation
- • 20% with indexation benefit
Property LTCG Exemptions
Reinvest entire capital gain in a new residential property within 2 years (or 3 years for construction). Full exemption available.
Invest up to Rs 50 lakh in NHAI/REC bonds within 6 months. 5-year lock-in.
Reinvest entire sale proceeds (not just gain) in a house. You shouldn't own more than one house.
Gold & Sovereign Gold Bonds Taxation
Physical/Digital Gold
- STCG (<24 months): Slab rate
- LTCG (≥24 months): 12.5% flat
Includes gold ETFs, gold mutual funds, digital gold
Sovereign Gold Bonds (SGB)
- At maturity (8 years): 0% tax
- Early exit: 12.5% LTCG (after 5 years)
- Sold on exchange: 12.5% LTCG
Plus 2.5% annual interest (taxable at slab)
Capital Gains Tax Exemptions Summary
| Section | Applicable On | Condition | Benefit |
|---|---|---|---|
| Sec 54 | House Property | Buy another house within 2 years | Full exemption |
| Sec 54EC | Any LTCG | Invest in NHAI/REC bonds (max Rs 50L) | Exemption up to Rs 50L |
| Sec 54F | Non-house assets | Invest entire sale proceeds in a house | Full exemption |
| Equity LTCG | Stocks & Equity MFs | Hold for 12+ months | Rs 1.25L/year exempt |
Real-World Calculation Examples
Example 1: Stock Trading Profit
Rahul bought Tata Motors shares for Rs 2,00,000 and sold after 8 months for Rs 2,80,000.
Example 2: Property Sale with Section 54
Priya sold a flat for Rs 1.2 Cr (bought 5 years ago for Rs 60L). She bought a new house for Rs 80L.
Note: New house value (Rs 80L) exceeds capital gain (Rs 60L), so full exemption available.
Frequently Asked Questions
What is the LTCG tax rate on equity mutual funds in India?▼
Long Term Capital Gains (LTCG) on equity mutual funds and stocks are taxed at 12.5% for gains exceeding Rs 1.25 lakh in a financial year (after Budget 2024 changes). Gains up to Rs 1.25 lakh are exempt from tax.
What is the holding period for LTCG on different assets?▼
For listed equity and equity mutual funds: 12 months. For debt mutual funds: 24 months (taxed at slab rates). For real estate and gold: 24 months. For unlisted shares: 24 months.
How can I save capital gains tax on property sale?▼
You can save capital gains tax on property by: 1) Investing in another residential property under Section 54, 2) Investing in capital gains bonds under Section 54EC (up to Rs 50 lakh), 3) Using the Capital Gains Account Scheme if reinvestment is delayed.
Are debt mutual fund gains taxed differently now?▼
Yes, from April 2023, all debt mutual fund gains (both STCG and LTCG) are taxed at your income tax slab rate. The indexation benefit for LTCG on debt funds has been removed.
What is the STCG tax rate on stocks in India?▼
Short Term Capital Gains (STCG) on listed equity shares and equity mutual funds (sold within 12 months) are taxed at a flat rate of 20% (increased from 15% in Budget 2024).
Is there any exemption on LTCG for equity investments?▼
Yes, for equity shares and equity mutual funds, LTCG up to Rs 1.25 lakh per financial year is exempt from tax. Only gains above this threshold are taxed at 12.5%.