New LTCG and STCG tax rates apply from Budget 2024. Here is what you need to know about capital gains tax on equity shares and mutual funds for FY 2025-26.
What Changed After Budget 2024?
Budget 2024 revised capital gains tax rates significantly. LTCG on equity rose from 10% to 12.5%. STCG on equity rose from 15% to 20%. The LTCG exemption limit increased from ₹1 lakh to ₹1.25 lakh. These rates apply from 23 July 2024.
LTCG vs STCG — When Does Each Apply?
| Asset | 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 |
| Property | ≤ 24 months | > 24 months |
Tax Rates for FY 2025-26
| Type | Rate | Notes |
| STCG (equity/equity MF) | 20% | Flat rate, no slab |
| LTCG (equity/equity MF) | 12.5% | On gains above ₹1.25L exemption |
| STCG (debt MF) | Slab rate | Added to income |
| LTCG (debt MF post Apr 2023) | Slab rate | Indexation removed |
| LTCG (property) | 12.5% | Without indexation |
LTCG Exemption of ₹1.25 Lakh
Long-term capital gains on equity up to ₹1.25 lakh per year are fully exempt. Only gains above this threshold attract 12.5% tax. A couple can each claim ₹1.25L exemption by holding investments in both names.
Tax Loss Harvesting Strategy
Sell loss-making equity positions before 31 March to book short-term or long-term losses. These can be set off against gains of the same year or carried forward for 8 years. This strategy can significantly reduce your capital gains tax liability.
How to Compute Capital Gains
LTCG = Sale Value − Cost of Acquisition (no indexation for equity). STCG = Sale Value − Cost. Cost of acquisition for equity purchased before 31 Jan 2018 uses the "grandfathering" rule: higher of actual cost or the highest price on 31 Jan 2018.
Need Help with Tax Filing?
Our experts handle your ITR, GST, and all compliance — you focus on what matters.