Capital Gains Tax India 2026: Exciting Guide

Capital Gains Tax India 2026: Equity LTCG (>1 year): 10% on gains exceeding ₹1L. Equity STCG (<1 year): 15% flat. Debt LTCG (>3 years): 20% with indexation. Debt STCG (<3 years): taxed per income slab. For property, LTCG (>2 years): 20% with indexation; STCG (<2 years): slab rate. Use tax harvesting to book up to ₹1L LTCG tax‑free annually. INDwallet Capital Gains Tax Calculator helps you compute exact liability.

AI Summary: Capital Gains Tax India

• Equity LTCG: 10% on gains above ₹1L per year. Equity STCG: 15% flat.
• Debt funds: LTCG (>3y) taxed at 20% with indexation; STCG taxed per slab.
• Indexation adjusts purchase price for inflation, reducing taxable gain.
• Tax harvesting: Book up to ₹1L LTCG each year tax‑free, then reinvest.
• Use Capital Gains Tax Calculator and Tax Simulator.

1. What is Capital Gains Tax?

Capital gains tax is levied on profit earned from selling a capital asset like stocks, mutual funds, property, or gold.

It is classified as Short Term Capital Gains (STCG) or Long Term Capital Gains (LTCG) based on the holding period.

• Equity shares & equity MF: Holding >1 year = LTCG; <1 year = STCG.
• Debt MF & gold: Holding >3 years = LTCG; <3 years = STCG.
• Property: Holding >2 years = LTCG; <2 years = STCG.

Read Equity Investing Tax India for deeper insights.

2. Equity: LTCG 10% over ₹1L, STCG 15%

For listed equity shares and equity-oriented mutual funds:

• LTCG (>1 year): 10% on gains exceeding ₹1,00,000 per financial year. No indexation benefit.
• STCG (<1 year): 15% flat on entire gain, irrespective of income slab.

Example: You sell shares after 2 years with ₹2,50,000 gain. Taxable LTCG = ₹2,50,000 - ₹1,00,000 = ₹1,50,000. Tax = ₹15,000.

Use Capital Gains Tax Calculator for precise computation.

3. Debt Funds: Indexation Benefit for LTCG

Debt mutual funds held for more than 3 years qualify for LTCG with indexation.

• STCG (<3 years): Gains added to income, taxed per slab.
• LTCG (>3 years): 20% tax after indexation. Indexation adjusts purchase cost for inflation using CII (Cost Inflation Index).

Example: Invested ₹1L in debt fund 4 years ago. CII increased by 20%. Indexed cost = ₹1.2L. Sold for ₹1.5L. Taxable gain = ₹30,000. Tax @20% = ₹6,000.

Indexation significantly reduces tax liability. Compare with FD in FD vs Debt Funds India.

4. Tax Harvesting: Book ₹1L LTCG Tax‑Free

Equity LTCG up to ₹1L per year is tax‑free. You can sell and immediately rebuy investments to "reset" cost basis.

• How it works: In March, sell equity holdings with LTCG just under ₹1L. Book tax‑free gains.
• Reinvest: Buy back the same or similar investments. New purchase price becomes higher cost basis.
• Benefit: Reduces future tax liability. Do this every year to maximize exemption.

Note: No wash sale rule in India. Read Equity Investing Tax India for detailed strategy.

5. Property: LTCG 20% with Indexation

For immovable property (land, house):

• STCG (<2 years): Gains added to income, taxed per slab.
• LTCG (>2 years): 20% tax with indexation benefit.

Exemptions under Section 54 & 54F: Reinvest LTCG in another residential property or specified bonds (54EC) to save tax.

Example: Sell property after 10 years. Indexed cost reduces taxable gain. Use Capital Gains Tax Calculator.

6. Capital Gains Tax Rates at a Glance

7. Grandfathering for Equity (Pre‑Feb 1, 2018)

For equity shares/MF acquired before Feb 1, 2018, cost of acquisition is the higher of:

• Actual purchase price, OR
• Lower of: (a) Fair Market Value as on Jan 31, 2018, (b) Actual sale price.

This ensures gains accrued before Feb 1, 2018, are not taxed. Grandfathering reduces LTCG liability on old holdings.

Read detailed guide on Equity Investing Tax India.

8. The Capital Gains Tax Flow

9. Mistakes to Avoid with Capital Gains Tax

10. Explore More INDwallet Tax Tools

• Capital Gains Tax Calculator – compute LTCG/STCG.
• Old vs New Tax Simulator – choose regime.
• Freelancer Tax Guide – 44ADA, advance tax.
• Equity Investing Tax India – detailed equity tax.
• Property Appreciation India – real estate returns.
• Investment Wallet – track all assets.