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Capital Gains Tax in FY 2025-26 — What You Need to Know
Budget 2026 confirmed no changes to capital gains tax rates or holding periods. The structure set by Budget 2024 (effective July 23, 2024) and confirmed by Budget 2025 continues for FY 2026-27. However, there are two important new rules from April 1, 2026:
New from April 1, 2026:
1. Share buybacks — Amounts received from share buybacks are now taxed as capital gains (not as deemed dividends at slab rate). Effective rate: 30% for individual promoters, 22% for company promoters.
2. Sovereign Gold Bonds (SGBs) from secondary market — If you bought SGBs from the stock exchange (not at original issue), the maturity gains are no longer tax-free. They will be taxed as capital gains based on holding period.
1. Share buybacks — Amounts received from share buybacks are now taxed as capital gains (not as deemed dividends at slab rate). Effective rate: 30% for individual promoters, 22% for company promoters.
2. Sovereign Gold Bonds (SGBs) from secondary market — If you bought SGBs from the stock exchange (not at original issue), the maturity gains are no longer tax-free. They will be taxed as capital gains based on holding period.
The key rates that have been confirmed unchanged for FY 2026-27:
❌ What Increased
- LTCG on equity: 10% → 12.5%
- STCG on equity: 15% → 20%
- LTCG exemption: ₹1L → ₹1.25L (small increase)
✅ Small Wins
- LTCG exemption raised to ₹1.25L
- LTCG on property: 20% + indexation → 12.5% flat (lower for most)
- Grandfathering for pre-July 2024 property purchases
Capital gains tax is the same under both Old and New Tax Regimes. Your regime choice doesn't affect capital gains — these are always taxed at special flat rates regardless of which income regime you select.
Holding Periods — Short vs Long Term
| Asset Type | Short Term (STCG) | Long Term (LTCG) |
|---|---|---|
| Listed Equity Shares | ≤ 12 months | > 12 months |
| Equity Mutual Funds | ≤ 12 months | > 12 months |
| Debt Mutual Funds | ≤ 24 months | > 24 months |
| Immovable Property (Land/House) | ≤ 24 months | > 24 months |
| Physical Gold / Gold ETF | ≤ 24 months | > 24 months |
| Unlisted Shares / Bonds | ≤ 24 months | > 24 months |
Capital Gains on Stocks & Equity MF
For listed equity shares and equity mutual funds (including balanced/hybrid funds with >65% equity), the new rates effective July 23, 2024:
Short Term (STCG) — held < 12 months
20%
Plus 4% cess = 20.8% effective
No exemption threshold
Long Term (LTCG) — held > 12 months
12.5%
Plus 4% cess = 13% effective
First ₹1.25L exempt per year
Tax harvesting strategy: You can book up to ₹1.25L in LTCG profits each financial year completely tax-free. By redeeming and reinvesting annually (tax harvesting), long-term investors can significantly reduce their future tax liability.
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Capital Gains on Debt Mutual Funds
Debt mutual funds lost their indexation benefit from April 1, 2023. Since FY 2023-24, gains from debt MFs are taxed at your income tax slab rate regardless of holding period — making them similar to FD interest for tax purposes.
Debt MFs are no longer tax-efficient over FDs for most investors. However, they still offer liquidity advantages. For tax efficiency, consider Sovereign Gold Bonds (SGT exempt at maturity), or equity MFs for long-term goals.
Capital Gains on Property Sale
This is the most complex change from Budget 2024. The indexation benefit that allowed property sellers to inflate their purchase price by inflation index — significantly reducing taxable gains — has been modified:
| Property Purchase Date | Tax Treatment (After July 23, 2024) |
|---|---|
| Purchased before July 23, 2024 | Choose the lower of: (a) 12.5% without indexation OR (b) 20% with indexation |
| Purchased on or after July 23, 2024 | 12.5% flat LTCG — no indexation benefit available |
| Property held ≤ 24 months | STCG — taxed at your income slab rate |
Example: You bought a flat in Delhi in 2015 for ₹50L and sold it in 2025 for ₹1.2Cr:
- Without indexation: Gain = ₹70L. Tax = 12.5% × ₹70L = ₹8.75L
- With indexation (2015–25 CII ~180%): Indexed cost = ₹50L × (363/254) ≈ ₹71.5L. Gain = ₹48.5L. Tax = 20% × ₹48.5L = ₹9.7L
- Best option: 12.5% without indexation saves ₹95,000 in this example.
Capital Gains on Gold & Sovereign Gold Bonds
| Gold Asset Type | Holding Period | Tax Rate |
|---|---|---|
| Physical Gold / Gold Jewellery | > 24 months | 12.5% LTCG (no indexation) |
| Physical Gold / Gold Jewellery | ≤ 24 months | Slab rate (STCG) |
| Gold ETF / Gold Mutual Fund | > 24 months | 12.5% LTCG |
| Sovereign Gold Bond (SGB) — held to maturity | 8 years | Tax-FREE (0% on maturity gains) |
| SGB — sold before maturity on exchange | > 12 months | 12.5% LTCG |
| SGB — bought from secondary market, held to maturity | 8 years | Taxable as capital gains (from April 2026 — no longer tax-free) |
SGBs held to maturity (8 years) are completely tax-free on gains only if purchased at original issue from the RBI/Bank. From April 1, 2026, SGBs purchased from the secondary market (stock exchange) will be taxed as capital gains at maturity. They also pay 2.5% annual interest (taxable at slab rate).
Section 54 & 54F — Save Tax on Property LTCG
Sold a property and made a large LTCG? You may be able to reinvest and claim full exemption:
Section 54 — Property to Property
- → Sold a residential property
- → Reinvest LTCG in another residential property
- → Within 1 year before or 2 years after sale
- → Or construct within 3 years
- → Entire LTCG is exempt (no cap)
Section 54F — Other Asset to Property
- → Sold any non-property asset (gold, stocks)
- → Reinvest net sale proceeds in residential property
- → Must not own more than 1 house at time of sale
- → Proportional exemption on partial reinvestment
- → Capped at ₹10Cr from Budget 2023
Want to know your exact salary after all deductions? Use our free Payslip Calculator →
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PaisaClarity Research Team
Capital gains rates verified against Finance Act 2024 and CBDT circulars. Effective from July 23, 2024. Not a substitute for professional tax advice — consult a CA for property transactions.
Frequently Asked Questions
Yes, with rules. Short term capital losses can be set off against both STCG and LTCG from any asset. Long term capital losses can be set off only against LTCG. Unabsorbed losses can be carried forward for 8 years (must file ITR by due date to carry forward). However, losses from equity cannot be set off against salary income.
Yes. Dividends from mutual funds are added to your regular income and taxed at your slab rate — TDS of 10% is deducted by the fund house if dividends exceed ₹5,000/year. Capital gains on redeeming MF units are taxed at the special capital gains rates (12.5% LTCG, 20% STCG for equity; slab rate for debt).
Yes. Gains on equity shares/MFs purchased before January 31, 2018 are grandfathered — the cost is deemed to be the higher of actual purchase price or the market price on January 31, 2018. This protects pre-2018 investors from being taxed on gains that accrued before LTCG tax was introduced.
Capital gains are reported in Schedule CG of ITR-2 or ITR-3. For equity MF investors, the fund house provides a Capital Gains Statement by March 31 each year. For stocks, you get the statement from your broker (Zerodha, Groww, etc.). Import these into your ITR or use the pre-filled ITR data from AIS.