Capital gains and investments · Tax Year 2025-26
Capital gains tax in India: complete guide
Capital gains are profits from selling shares, mutual funds, property, gold and other assets. This guide explains short-term and long-term gains, holding periods, tax rates, exemptions and how losses are set off, with the rates used for the tax year 2025-26.
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A capital gain is the profit when you sell a capital asset such as shares, mutual funds, property or gold. It is short-term or long-term depending on how long you held the asset, and each has its own rate. For the tax year 2025-26, gains on listed shares and equity mutual funds are taxed at 20% (short-term) and 12.5% above ₹1,25,000 (long-term).
The rates here are signed off for the tax year 2025-26. For the tax year 2026-27 they are provisional, since the rule set repeats 2025-26 and has not been signed off against the Income-tax Act, 2025 or the Finance Act 2026. Check the figures for 2026-27 again before you rely on them.
Short-term or long-term
The dividing line is the holding period.
Asset | Long-term if held more than |
|---|---|
Listed shares, equity-oriented mutual fund units, UTI units, zero-coupon bonds, business-trust units | 12 months |
Every other asset (property, gold, unlisted shares, debt funds and so on) | 24 months for transfers on or after 23-Jul-2024 |
For transfers before 23-Jul-2024, other assets needed 36 months, and unlisted shares and property needed 24 months. Check the date of sale carefully.
Tax rates
Gain | Rate |
|---|---|
Short-term gain on listed shares and equity funds | 20% |
Long-term gain on listed shares and equity funds | 12.5% on gains above ₹1,25,000 in the year |
Long-term gain on other assets | 12.5% without indexation |
Long-term gain on land or building acquired before 23-Jul-2024 | A choice of 12.5% without indexation, or 20% with indexation (the proviso for those assets) |
Short-term gain on other assets | Added to your income and taxed at your slab rates |
Virtual digital assets (crypto) | 30% flat, no deduction other than cost, no set-off of loss |
Before 23-Jul-2024 the rates were 15% and 10%. A sale on or after that date uses the new rates.
Indexation and the cost of acquisition
Indexation adjusts the purchase cost for inflation using the Cost Inflation Index (CII). TaxCare holds the index from 2001-02 (100) to 2025-26 (376). For example, a property bought in 2012-13 (index 200) and sold in 2025-26 (index 376) has its cost multiplied by 1.88 where indexation is available.
For listed shares and equity funds bought before 1-Feb-2018, the cost is taken as at least their value on 31-Jan-2018 (grandfathering). For property sales, if the stamp-duty value is more than the sale price by more than 10%, the stamp-duty value is taken as the sale price.
Specified mutual funds
Units of certain debt-oriented funds bought on or after 1-Apr-2023 are taxed as short-term gains whatever the holding period (section 50AA).
Exemptions that can reduce the gain
Exemption | Idea | Limit on TaxCare's rules |
|---|---|---|
Section 54 and 54F | Reinvest in a residential house | Cost of the new house counted up to ₹10 crore |
Section 54EC | Invest in specified bonds within 6 months | Up to ₹50 lakh in a year |
Each exemption has its own conditions on what is sold, what is bought and by when. A Tax Expert can check whether your sale qualifies.
Setting off losses
- A short-term loss can be set off against short-term and long-term gains.
- A long-term loss can be set off only against long-term gains.
- Capital losses cannot be set off against salary, house property or other income.
- Unabsorbed capital losses can be carried forward for 8 years, but only if the return is filed on time. A belated return loses the carry-forward of most losses.
The new regime rebate and capital gains
The ₹60,000 rebate in the new regime covers tax on normal slab income only. It does not reduce tax on capital gains taxed at special rates.
Records to keep
- Contract notes, broker statements and mutual fund statements, with purchase dates and costs.
- Sale deed, purchase deed and proof of improvement cost for property.
- Stamp-duty value for property.
- The bank statement showing the investment for an exemption.
Reporting
Capital gains are not in ITR-1 beyond ₹1,25,000 of long-term gains on listed shares. Other capital gains need ITR-2 or ITR-3. See how to report capital gains in your ITR and which ITR form to file.
How TaxCare helps
TaxCare reads your sale of securities and units from your AIS and TIS after you confirm with an OTP, builds lot-level gains using the rules above and applies set-off and carry-forward. It chooses ITR-2 or the form your data needs. If a sale falls outside what the guided flow covers, it hands the return to a Tax Expert. See pricing.
This guide gives general information and is not professional tax advice.
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