If you have started investing and creating assets to earn money out of it, it is important to know what capital gain tax (CGT) is. In India, any profit you make from selling an asset — property, shares, mutual funds, gold, or anything similar — is taxed as a capital gain.
Any profit you make on an asset after selling it is called a capital gain — that includes selling land, property, shares, mutual funds, gold, vehicles, or almost anything else you own.
Since you’ve made a profit, you pay tax on it — called capital gains tax. It’s classified into two types:
The holding period that decides short-term vs. long-term depends on the asset:
For listed equity shares and equity mutual funds, STCG is taxed at a flat 20% (revised upward from 15%, effective for transactions on or after 23 July 2024), regardless of your income tax slab.
For other assets — like property sold within 24 months — the short-term gain is simply added to your total income and taxed at your regular income tax slab rate. For example:
If you bought a flat in January 2024 for ₹40 lakh and sold it in January 2026 for ₹43 lakh with a brokerage expense of ₹30,000, since you held it for under 24 months, this is a short-term capital gain:
| Particulars | Amount (₹) |
| Sale value of flat (Jan 2026) | 43,00,000 |
| Expense incurred | 30,000 |
| Net sale value | 42,70,000 |
| Purchase cost (Jan 2024, incl. any improvement cost) | 40,00,000 |
| Total profit (STCG) | 2,70,000 |
This ₹2,70,000 gets added to your total income and taxed at your applicable income tax slab rate — it doesn’t get a special flat rate since it’s a non-equity asset.
Following the Union Budget 2024 (effective 23 July 2024), LTCG rates were significantly restructured. LTCG is now taxed at a flat 12.5% across most asset classes — this replaced the earlier structure where equity was taxed at 10% and most other assets at 20% with indexation.
For listed equity shares and equity mutual funds: LTCG is tax-free up to ₹1.25 lakh per financial year (raised from ₹1 lakh), with 12.5% charged on gains above that threshold.
For property and most other assets: LTCG is taxed at 12.5% without indexation. One important exception — for property bought before 23 July 2024, resident individuals can choose whichever is lower: 12.5% without indexation, or 20% with indexation. This grandfathering rule only applies to land and buildings, not other asset classes.
For example, if you have a long-term capital gain of ₹3,00,000 from a property, and it doesn’t qualify for the grandfathered indexation option, you’d pay 12.5% — ₹37,500 in tax, plus 4% health and education cess on top.
These tax rules can and do change with each year’s budget, so always confirm the current rate before finalizing a major sale, or consult a tax professional for anything beyond a rough estimate.
Yes — a few common ones include reinvesting property sale proceeds into another residential property (Section 54), investing in specified bonds (Section 54EC), and certain exemptions tied to age and income thresholds. Each has specific conditions and timelines, so check eligibility carefully before relying on one.
Capital gains tax rules are revised almost every budget cycle — this article reflects rules as of the 2024 restructuring (unchanged through Budget 2026), but always verify the current rate before making a major financial decision.
