What is the tax on short-term gains from shares?

20% on gains from listed equity shares and equity mutual funds held 12 months or less, for sales from 23 July 2024. Cess of 4% is added.

How much long-term gain on shares is tax-free?

Gains up to ₹1,25,000 a year on listed equity shares and equity funds are tax-free. Gains above that are taxed at 12.5%.

Is indexation still available on property?

Only as an option for resident individuals and HUFs on land or buildings bought before 23 July 2024: they can pay the lower of 12.5% without indexation or 20% with indexation. For property bought later, it is 12.5% without indexation.

Does the ₹12 lakh rebate cover capital gains?

No. The new regime rebate does not apply to tax on special-rate gains such as short-term or long-term equity gains, so that tax is payable even if your other income is under ₹12 lakh.

Capital gains tax: the basics

Updated 11 October 2026

Capital gains tax is the tax on the profit you make when you sell an asset such as shares, mutual fund units, gold or property. Since 23 July 2024, short-term gains on listed equity are taxed at 20%, and long-term gains on listed equity at 12.5% above ₹1,25,000 a year. Long-term gains on property are taxed at 12.5% without indexation, with an option for individuals to use the older 20%-with-indexation method for property bought before 23 July 2024. This guide covers the basics; capital gains have many special cases, so check the details for your situation.

What counts as a capital gain

A capital gain is the sale price minus the cost of buying the asset and the costs of the sale (such as brokerage or a property broker's fee). Whether a gain is short-term or long-term depends on how long you held the asset:

Asset	Long-term if held more than
Listed shares, equity mutual funds, listed units	12 months
Property, gold, unlisted shares and most other assets	24 months

Your salary is not a capital gain, and neither is interest. Profits from frequent trading may be treated as business income instead, which follows different rules.

Shares and equity mutual funds

Type of gain	Rate (from 23 Jul 2024)
Short-term gain on listed equity shares and equity funds (STT paid)	20%
Long-term gain on the same	12.5% on gains above ₹1,25,000 in the year

Before 23 July 2024 the rates were 15% and 10% (with a ₹1,00,000 exemption). For shares bought before 1 February 2018, the cost can be taken as the market price on 31 January 2018 if that is higher, which protects older gains from tax.

Gains from debt mutual funds bought on or after 1 April 2023 are added to your income and taxed at your slab rate, however long you hold them.

Property

Long-term gains on land or buildings are taxed at 12.5% without indexation. Indexation means raising your purchase cost by an inflation index (the Cost Inflation Index) so that only the real gain is taxed. It was removed for most assets from 23 July 2024.

For land or a building bought before 23 July 2024, a resident individual or HUF can pay the lower of two figures: 12.5% without indexation, or 20% with indexation. Short-term gains on property (held 24 months or less) are added to your income and taxed at slab rates.

Tax on long-term property gains can be reduced or avoided by reinvesting, for example by buying another residential house within the time limits, or by investing up to ₹50 lakh in specified bonds within six months. These exemptions have detailed conditions and caps, so check them before you sell.

Worked examples

Worked example. Shares. Kavita sells listed shares she held for two years at a gain of ₹2,00,000, her only equity gain in the year. Taxable long-term gain = ₹2,00,000 − ₹1,25,000 = ₹75,000. Tax = 12.5% × ₹75,000 = ₹9,375, plus 4% cess of ₹375, so ₹9,750. If instead she had held them for eight months and made ₹50,000, the short-term tax would be 20% × ₹50,000 = ₹10,000, plus ₹400 cess, so ₹10,400.

Property. Rajesh bought a flat in 2015 for ₹40 lakh and sells it in October 2026 for ₹90 lakh, with no other costs. Option A: gain ₹50 lakh × 12.5% = ₹6,25,000. Option B: suppose his indexed cost works out to ₹60 lakh (the actual figure depends on the index notified for each year); gain ₹30 lakh × 20% = ₹6,00,000. Because he bought before 23 July 2024, he can pay the lower figure, ₹6,00,000, plus cess and any surcharge.

Rebate, slabs and regime

The special rates above apply in both the old and new regimes.
The rebate that makes income up to ₹12 lakh tax-free in the new regime does not apply to tax on these special-rate gains. So a person with a salary under the rebate limit can still owe tax on short-term or long-term equity gains.
Resident individuals whose other income is below the basic exemption limit can use the unused part of that limit against the gains.
Surcharge on these gains is capped at 15%, and 4% cess applies on top.

Reporting and paying

Capital gains are reported in ITR-2 or ITR-3, not ITR-1 (except small long-term equity gains within the ₹1,25,000 exemption, where newer ITR-1 versions allow reporting). Brokers and fund houses send capital gains statements, and your AIS shows sales of shares and funds. If the tax on gains is large, you may need to pay advance tax in the instalment after the sale to avoid interest. See which ITR form to use.

The official rules are on the Income Tax Department website.