The July 23, 2024 Budget changed almost every capital gains rate in India. Here is the complete guide for FY 2025-26 — what the new rates are, how indexation works now, and exactly how to report in your ITR.
The Four Numbers Every Investor Must Know
The Finance (No. 2) Act, 2024 (the July 2024 Budget) overhauled India’s capital gains tax structure. Budget 2025 and Budget 2026 made no further changes. These four numbers define the entire framework for FY 2025-26.
STCG on listed equity & equity MF (up from 15%)
Uniform LTCG rate — all asset classes
Annual LTCG exemption — listed equity/equity MF only
Cost Inflation Index (CII) for FY 2025-26 (CBDT Notif. 70/2025)
Many taxpayers are still computing gains at old rates — do not make this mistake
The old rates of 15% STCG and 10% LTCG on equity no longer apply to transactions on or after 23 July 2024. If you sold equity shares or mutual funds between April 2025 and March 2026 and are using 15%/10%, your tax computation is wrong. The ITR forms for AY 2026-27 have removed the old-rate fields — they simply do not exist anymore.
The Pivotal Date: 23 July 2024
Every capital gains computation for FY 2025-26 turns on one date: 23 July 2024 — the day the Finance (No. 2) Bill, 2024 was presented in Parliament. Transactions before and after this date are governed by different rules for several asset classes. This date-based split continues to create reporting complexity even now.
Before 23 July 2024 — old rates apply
STCG on equity: 15% (Section 111A). LTCG on equity: 10% above ₹1 lakh (Section 112A). LTCG on other assets: 20% with indexation (Section 112). These rates apply to all qualifying transactions completed before this date, regardless of when the ITR is filed.
From 23 July 2024 — new rates apply
STCG on equity: 20% (Section 111A). LTCG on equity: 12.5% above ₹1.25 lakh (Section 112A). LTCG on all other assets: 12.5% without indexation (Section 112). Indexation benefit removed for all assets purchased on or after this date. For property purchased before 23 July 2024, there is a transitional option (explained below).
FY 2025-26 in full (April 2025 – March 2026)
All transactions in FY 2025-26 fall after 23 July 2024 — so new rates apply universally. The date-based split only matters for taxpayers who had transactions in FY 2024-25 spanning the two sides of 23 July. For the current ITR filing covering FY 2025-26, use new rates for all transactions.
📌 Simple rule for FY 2025-26: Every capital gain arising in April 2025 through March 2026 uses the new rates — STCG equity at 20%, LTCG everything at 12.5%. The split reporting requirement (pre/post July 23) was relevant for AY 2025-26; for AY 2026-27, all transactions in the year use new rates uniformly.
Complete Capital Gains Rate Chart — FY 2025-26 (AY 2026-27)
| Asset type | Holding period (Long-term) | STCG rate | LTCG rate | Indexation | Annual exemption |
|---|---|---|---|---|---|
| Listed equity sharesSTT paid on sale | > 12 months | 20% 15% |
12.5% u/s 112A |
❌ Not available | ✅ ₹1.25 lakh |
| Equity-oriented mutual fundsEquity holding >65%; STT paid | > 12 months | 20% | 12.5% u/s 112A |
❌ Not available | ✅ ₹1.25 lakh |
| Residential / commercial propertyLand and building | > 24 months | Slab rates | 12.5% (no indexation) OR 20% + indexation if pre-Jul 2024 purchase |
⚠️ Only for pre-23 Jul 2024 purchases | ❌ No general exemption (use Sec 54/54EC/54F) |
| Gold & jewelleryPhysical gold, Gold ETF (non-equity) | > 24 months | Slab rates | 12.5% No indexation |
❌ Removed | ❌ No exemption |
| Sovereign Gold Bonds (SGBs)Held to maturity (8 years) | N/A (maturity) | Slab rates | EXEMPT at maturity | N/A | ✅ Fully exempt at maturity |
| Debt mutual fundsUnits purchased on or after 1 Apr 2023 | No LTCG — all gains at slab | Slab rates regardless of holding period (Sec 50AA) | ❌ N/A | ❌ No exemption | |
| Debt MF — pre 1 Apr 2023 units | > 36 months | Slab rates | 12.5% | ❌ Removed post-Jul 2024 | ❌ No exemption |
| Unlisted equity shares | > 24 months | Slab rates | 12.5% | ❌ Removed | ❌ No exemption |
| Virtual Digital Assets (Crypto) | No LTCG concept | 30% flat — regardless of holding period (Sec 115BBH) | ❌ No deductions except cost | ❌ No exemption; no loss set-off | |
| Bonds (listed tax-free bonds) | > 12 months | Slab rates | 12.5% | ❌ Removed | ❌ No exemption |
| Business trust units (InvITs, REITs)STT paid | > 12 months | 20% | 12.5% | ❌ Not available | ✅ ₹1.25 lakh (combined with equity) |
Note: All rates above are base rates. Add 4% Health & Education Cess on the tax amount. Surcharge applies at higher income levels. NRI rates differ for certain asset classes.
Equity Shares and Equity Mutual Funds
Equity is the asset class most directly affected by the July 2024 Budget changes, and the one where most salaried investors will have transactions to report.
Short-Term Capital Gains (STCG) — sold within 12 months
If you sell listed equity shares or units of equity-oriented mutual funds within 12 months of purchase, the gain is a short-term capital gain taxable at 20% under Section 111A (up from the old 15%). The new 20% rate applies to all sales on or after 23 July 2024. The rate is flat — it does not matter what your income slab is, and no deductions under Chapter VI-A (80C, 80D, etc.) can be set off against STCG.
Long-Term Capital Gains (LTCG) — held beyond 12 months
If you sell after holding for more than 12 months, the gain is LTCG taxable at 12.5% under Section 112A (up from 10%). The first ₹1.25 lakh of LTCG per financial year (from all equity and equity MF sales combined) is exempt. Only gains above this threshold are taxed at 12.5%.
Grandfathering rule — shares purchased before 31 January 2018
If you hold equity shares or equity mutual fund units that were purchased before 31 January 2018, the grandfathering rule under Section 112A applies. Your cost of acquisition is deemed to be the higher of:
- The actual purchase price paid, or
- The Fair Market Value (FMV) of the shares/units as on 31 January 2018
However, the deemed cost cannot exceed the actual sale consideration. This means gains that had accrued up to 31 January 2018 are effectively tax-free — only the appreciation after that date is taxed.
How to get FMV as on 31 January 2018
For listed shares: use the highest quoted price on 31 January 2018 from BSE/NSE. For equity MF units: use the NAV declared by the mutual fund on that date. AMFI and fund house websites publish historical NAVs. Your broker’s capital gains statement should also compute the grandfathered cost — but verify it independently for high-value transactions.
Property — Residential and Commercial
Property is the asset class with the most complexity under the new rules, because of the transitional indexation option for pre-July 2024 purchases.
Holding period and rate
Property held for more than 24 months qualifies as a long-term capital asset. STCG (held 24 months or less) is added to your total income and taxed at your applicable slab rate. LTCG is taxed at 12.5% without indexation for all properties purchased from 23 July 2024 onwards.
The transitional option: two computation choices
For property purchased before 23 July 2024, resident individuals and HUFs have a choice. You may compute your LTCG under either of the following and pay whichever results in a lower tax:
Option A — New Regime
- No indexation benefit
- LTCG = Sale price − Original cost − Transfer expenses
- Often better for recently-purchased properties or those in high-appreciation areas
- Available for all pre-July 2024 property purchases
Option B — Old Regime
- Indexed cost using CII: FY 2025-26 CII = 376
- LTCG = Sale price − (Original cost × CIIsale year ÷ CIIpurchase year) − expenses
- Often better for older properties or those in lower-appreciation locations
- NRIs cannot use this option — only resident individuals and HUFs
Always compute both options — the better one can save lakhs
The right choice depends on your property’s appreciation rate and how long you held it. For a property bought in 2010 for ₹40 lakh and sold in FY 2025-26 for ₹1.2 crore, Option B (20% + CII 376/CII 167) often produces significantly lower tax due to the high inflation adjustment reducing the taxable gain. Run both calculations before filing.
Bought flat in FY 2010-11 at ₹50 lakh (CII: 167). Sold in FY 2025-26 at ₹1.2 crore (CII: 376). Transfer expenses: ₹1.5 lakh.
TDS on property purchase — Section 194IA
If you purchased a property worth more than ₹50 lakh, the buyer was required to deduct TDS at 1% of the consideration under Section 194IA. This TDS should appear in your Form 26AS and can be claimed as a credit against your tax liability in the ITR. Ensure the buyer filed Form 26QB and the credit reflects in your 26AS before filing.
Gold, Jewellery, and Sovereign Gold Bonds
Physical gold and gold jewellery
Physical gold and gold jewellery held for more than 24 months qualifies as LTCG, taxable at 12.5% without indexation. Short-term gains (held 24 months or less) are added to income and taxed at slab rates. Indexation has been removed for all gold sold from 23 July 2024 onwards — the gain is simply: sale price minus original cost minus transfer expenses.
Sovereign Gold Bonds (SGBs) — maturity exemption
SGBs held to their full 8-year maturity continue to be fully exempt from capital gains tax upon redemption — this exemption was not disturbed by the Budget 2024 changes. If you exit SGBs before maturity (through the RBI’s buyback window or on the stock exchange), gains are treated as: long-term at 12.5% if held for 12+ months (exchange) or 12.5% after 12 months (buyback), and short-term at slab rates otherwise.
Gold ETFs and Gold Fund of Funds
Gold ETFs traded on stock exchanges are treated differently from physical gold: they follow equity ETF rules — LTCG at 12.5% after 12 months (if STT paid). Gold Fund of Funds (non-exchange-traded) follow the debt fund rules: for units purchased from 1 April 2023 onwards, all gains are at slab rates regardless of holding period.
Debt Mutual Funds — The Special Rule Since April 2023
This is the single most misunderstood capital gains provision. Many investors still believe debt mutual funds have a 3-year LTCG benefit. That changed from 1 April 2023.
Debt MF units purchased on/after 1 April 2023 — all gains at slab rate, no LTCG
Under Section 50AA, gains from debt mutual fund units purchased from 1 April 2023 are treated as short-term capital gains regardless of how long you held them — even if you held them for 5 or 10 years. The gain is added to your total income and taxed at your applicable slab rate. There is no LTCG treatment, no 12.5% rate, and no indexation benefit. This is not a new Budget 2024 change — it was introduced in April 2023 and continues unchanged.
For debt mutual fund units purchased before 1 April 2023, the old rules may apply: if held for more than 36 months, the gain qualifies as LTCG. However, indexation has been removed for all sales after 23 July 2024 — so even pre-April 2023 units sold now attract LTCG at 12.5% without indexation if held for 36+ months.
Virtual Digital Assets (Crypto) — 30% Flat Rate
Under Section 115BBH, all gains from transfer of Virtual Digital Assets (VDAs) — cryptocurrency, NFTs, and other digital assets — are taxed at a flat 30% regardless of holding period. There is no short-term/long-term distinction for VDAs.
Key restrictions for VDA taxation
- No deduction is allowed except the cost of acquisition. Infrastructure costs, exchange fees, and transaction costs cannot be deducted.
- No loss set-off: Losses from one VDA cannot be set off against gains from another VDA, or against any other income head.
- TDS under Section 194S: Exchanges must deduct 1% TDS on VDA sales above ₹10,000 per transaction. This TDS is your credit — visible in Form 26AS.
- Schedule VDA in ITR-2/ITR-3: Must be disclosed coin-by-coin or transaction-by-transaction in Schedule VDA. Cannot use ITR-1 or ITR-4 for VDA income.
- Add 4% cess on the 30% tax — effective rate is 31.2%.
Exemptions Under Sections 54, 54EC, and 54F
Capital gains exemptions allow you to shelter LTCG from tax by reinvesting the proceeds in specified assets. These provisions remain fully available under the new rate regime — the indexation removal does not affect exemption eligibility. The exemption is applied after computing the gain at the applicable rate.
Reinvestment in Residential Property
- Who can use it: Resident individuals and HUFs selling a long-term residential house property
- What qualifies: Purchase a new residential property within 1 year before or 2 years after sale; OR construct within 3 years after sale
- Exemption amount: LTCG or investment in new property — whichever is lower
- One property at a time: You cannot own more than one other residential house on the sale date (to use the “one house” condition in Sec 54F)
- CGAS: If reinvestment not complete by ITR due date — deposit unused LTCG in Capital Gains Account Scheme (CGAS) at an authorised bank before 31 July 2026
Investment in Specified Bonds
- Who can use it: Any taxpayer with LTCG from any long-term capital asset (land, building, property)
- What qualifies: Investment in bonds issued by NHAI or REC (also IRFC and PFC are eligible)
- Timeline: Within 6 months of the date of transfer — strictly enforced
- Exemption amount: Amount invested (up to the LTCG amount)
- Lock-in: 5 years. Premature encashment forfeits the exemption and the gain becomes taxable in the year of encashment
- No CGAS needed — but investment must be made within 6 months
Any LTCG into Residential Property
- Who can use it: Resident individuals and HUFs with LTCG from any asset other than a residential house (use Sec 54 for residential property)
- What qualifies: Reinvestment of the full net sale consideration (not just the gain) into a new residential house within 2 years (purchase) or 3 years (construction)
- Partial exemption: If only part of the sale consideration is reinvested, exemption is proportionate
- One-house condition: You must not own more than one residential house on the sale date, and must not purchase another house within 2 years or construct within 3 years
Missing the CGAS deadline is one of the most expensive mistakes
If you sold a property in FY 2025-26 and plan to reinvest under Section 54 or 54F, but the reinvestment is not complete before 31 July 2026 (the ITR due date), you must deposit the unutilised amount in a Capital Gains Account Scheme (CGAS) before filing your ITR. Failure to deposit in CGAS by 31 July means the full LTCG becomes taxable in AY 2026-27, even if you later reinvest. The CGAS deposit preserves your exemption entitlement while reinvestment is in progress.
Capital Loss Set-Off and Carry-Forward Rules
Capital losses can be a significant planning tool — but only if the rules are followed precisely and the ITR is filed on time.
Short-Term Capital Loss (STCL) can be set off against:
- ✔ Short-term capital gains (STCG) from any asset
- ✔ Long-term capital gains (LTCG) from any asset
- ✘ Salary income
- ✘ Business or professional income
- ✘ Income from other sources
Long-Term Capital Loss (LTCL) can be set off against:
- ✔ Long-term capital gains (LTCG) only
- ✘ Short-term capital gains (STCG)
- ✘ Salary, business, or other income
- ✘ VDA/crypto income
Carry-forward: 8 assessment years — but ONLY if ITR is filed on time
Both STCL and LTCL can be carried forward for up to 8 assessment years to be set off against future capital gains. However, this right is permanently forfeited if the return for the year in which the loss arose is not filed by the original due date (31 July 2026 for ITR-2). A belated return filed after 31 July cannot carry forward capital losses. This alone is reason enough to file on time even in a loss year.
VDA/crypto losses — zero set-off and zero carry-forward
Under Section 115BBH, losses from Virtual Digital Assets cannot be set off against VDA gains, equity gains, or any other income — in the current year or in future years. A ₹5 lakh loss on crypto cannot be used to reduce any tax liability. This is a hard legislative restriction, not a procedural one.
How to Report Capital Gains in Your ITR — Step by Step
Capital gains must be reported in ITR-2 (if no business income) or ITR-3 (if combined with business income). ITR-1 can only be used if your LTCG under Section 112A does not exceed ₹1.25 lakh and there are no carry-forward losses.
Gather your capital gains statements
For equity and mutual funds: download the Capital Gains Statement from your broker or CAMS/KFintech (for MFs). For property: compute the gain manually using the purchase deed, sale deed, and registration/transfer expenses. For VDAs: download transaction history from all exchanges. Cross-check with your AIS — it shows gross sale proceeds for all transactions.
Classify each transaction
For every asset sold: determine the holding period (date of purchase to date of sale), classify as STCG or LTCG, and determine the applicable rate. For property purchased before 23 July 2024, compute under both options. Note: for debt MF units purchased after 1 April 2023, all gains go under slab rate — not under Schedule CG.
Fill Schedule CG in ITR-2/ITR-3
Schedule CG requires details for each asset type separately:
- Section A — Short-term capital gains: Break into listed equity (111A), other STCG at slab rate, VDA (115BBH). Enter sale consideration, cost, transfer expenses, gain/loss for each.
- Section B — Long-term capital gains: Equity under 112A (goes to Schedule 112A), property/gold/others under 112. For pre-July 2024 property, enter both computations and select the lower-tax option.
- Section C — Set-off: Apply current-year STCL/LTCL against gains in the specified sequence.
- Exemptions: Enter amounts claimed under Sections 54, 54EC, 54F with supporting details of reinvestment.
Fill Schedule 112A — scrip-wise for equity LTCG
If you have LTCG under Section 112A (listed equity or equity MF), you must fill Schedule 112A with scrip-wise details for each company or fund: ISIN code, name, number of units, sale consideration, cost of acquisition (with grandfathering if applicable), and the FMV as on 31 January 2018 (for pre-2018 purchases). This is a mandatory, detailed schedule — do not aggregate transactions.
Reconcile with your AIS and Form 26AS
The AIS will show gross sale proceeds for every securities transaction. Your ITR’s Schedule CG shows the net gain after deducting cost and expenses. These figures will differ — this is expected and not a mismatch. What matters is that the assets listed in AIS are all accounted for in Schedule CG (even if the gain is zero or a loss). Unexplained sale proceeds in AIS with nothing in Schedule CG will trigger a 143(1) notice.
Check whether advance tax was correctly paid
Capital gains are liable for advance tax. If your capital gains tax liability (after TDS credits) exceeds ₹10,000 for the year, advance tax instalments were due. Check whether advance tax was paid — if not, interest under Sections 234B and 234C applies. For transactions arising after March 15, 2026, advance tax is due by 31 March 2026 (last instalment). Pay any outstanding tax as self-assessment tax before filing.
Frequently Asked Questions
Capital Gains Computation Getting Complex?
Property sales with the indexation decision, multiple equity transactions requiring Schedule 112A, and exemption planning under Sections 54/54EC/54F — our senior CAs compute every rupee correctly and file your return on time.