Budget 2024 significantly revised capital gains tax rates, creating confusion for many investors. Understanding the new rules for both short-term and long-term capital gains is essential for effective tax planning in 2025-26.

Short-Term Capital Gains (STCG)

STCG applies when you sell an asset within the holding period threshold.

  • Listed equity shares and equity mutual funds (held < 12 months): 20% (revised from 15% in Budget 2024)
  • Debt funds (held < 36 months): Taxed at slab rates (no special rate)
  • Immovable property (held < 24 months): Taxed at slab rates

Long-Term Capital Gains (LTCG)

  • Listed equity / equity mutual funds (held > 12 months): 12.5% on gains exceeding \u20b91,25,000 in a year (revised from 10% over \u20b91 lakh in Budget 2024)
  • Debt mutual funds (held > 36 months): Taxed at slab rates (indexation removed from April 2023)
  • Immovable property (held > 24 months): 12.5% without indexation (Budget 2024 change; older purchases may have indexation benefit under a transition rule)
  • Gold (held > 24 months): 12.5% without indexation

Tax Harvesting Strategy

Since LTCG on equity up to \u20b91,25,000/year is tax-free, you can book profits annually up to this limit and reinvest-effectively resetting your cost base without paying tax.

Set-Off and Carry Forward

  • STCG can be set off against STCG only
  • LTCG can be set off against LTCG only
  • Unabsorbed capital losses can be carried forward for 8 years

Use the SaveTaxNow Calculator for overall tax planning that incorporates your capital gains.