Capital Gains Tax in India 2025: STCG vs LTCG, Property, Equity

Capital gains tax in India changed significantly with the Union Budget 2024. The Income Tax Act, 2025 codifies these changes — new STCG rate of 20%, LTCG at 12.5%, removal of indexation for property sales, and ₹1.25 lakh exemption on equity LTCG. This guide covers all asset classes with worked examples.

Types of capital gains

Whether a capital gain is short-term or long-term depends on the holding period — how long you owned the asset before selling it. The key threshold for most assets is 24 months, but equity and equity mutual funds have a lower threshold.

Asset Class	Short-Term (STCG)	Long-Term (LTCG)	STCG Rate	LTCG Rate
Listed equity shares	< 12 months	≥ 12 months	20% (Sec 111A)	12.5% above ₹1.25L (Sec 112A)
Equity mutual funds (ELSS, Index, etc.)	< 12 months	≥ 12 months	20%	12.5% above ₹1.25L
Debt mutual funds (post Apr 2023)	Any holding period	N/A (no LTCG)	Slab rate	Slab rate
Immovable property (land/building)	< 24 months	≥ 24 months	Slab rate	12.5% (no indexation from Jul 2024)
Gold / physical gold	< 24 months	≥ 24 months	Slab rate	12.5%
Sovereign Gold Bonds (SGB)	< 12 months	≥ 12 months	Slab rate	12.5%
Debt bonds / NCDs	< 24 months	≥ 24 months	Slab rate	12.5%
Unlisted shares	< 24 months	≥ 24 months	Slab rate	12.5%

LTCG on equity: the ₹1.25 lakh exemption

Long-term capital gains on listed equity shares and equity mutual funds above ₹1.25 lakh per year are taxed at 12.5% with no indexation benefit (Section 112A, retained with same number in the 2025 Act). Key points:

• Gains up to ₹1,25,000 in a financial year: zero tax
• Gains above ₹1,25,000: 12.5% on the excess only
• No benefit of basic exemption limit against LTCG (except for senior citizens)
• Securities Transaction Tax (STT) must have been paid on both purchase and sale

Example: You sell equity shares in December 2025 with a long-term gain of ₹3,00,000.
Exempt: ₹1,25,000. Taxable gain: ₹1,75,000. Tax: ₹1,75,000 × 12.5% = ₹21,875 (+ 4% cess = ₹22,750).

Capital gains on property: indexation removed

One of the most significant changes in Budget 2024 (now codified in the Income Tax Act, 2025) is the removal of the indexation benefit for property sold after 23 July 2024:

Scenario	Before 23 July 2024	From 23 July 2024
Purchase price	₹40 lakh (2010)	₹40 lakh (2010)
Sale price	₹1.2 crore (2025)	₹1.2 crore (2025)
Indexed cost (CII-adjusted)	~₹80 lakh	Not available
Capital gain	₹40 lakh (indexed)	₹80 lakh (actual)
Tax rate	20% with indexation	12.5% without indexation
Tax payable	₹8 lakh	₹10 lakh

In this example, the removal of indexation results in ₹2 lakh more tax. However, for properties where the CII adjustment would have been minimal, the lower 12.5% rate could be beneficial. The impact is property and acquisition-year specific.

Set-off and carry forward of capital losses

Loss Type	Can be set off against	Carry forward period
Short-term capital loss	Any capital gain (STCG or LTCG)	8 years
Long-term capital loss	Long-term capital gains only	8 years
Any capital loss	Cannot be set off against other income heads	—

Important: Capital losses can only be carried forward if your ITR is filed before the due date. Late filers lose this benefit.

How to save capital gains tax legally

• Section 54 (property reinvestment) — Invest LTCG from residential property into another residential property within 2 years (or construct within 3 years) to claim exemption. Available under Section 54 in both 1961 and 2025 Acts.
• Section 54EC — Invest LTCG up to ₹50 lakh in notified bonds (NHAI, REC) within 6 months of sale. Lock-in period: 5 years.
• Section 54F — Invest net sale consideration (not just gain) from any long-term asset (not property) into residential property.
• Tax loss harvesting — Sell equity positions at a loss to offset gains. Can be done systematically in March each year. Repurchase after 30 days if needed.
• LTCG harvesting (₹1.25L annually) — Book up to ₹1.25 lakh of equity LTCG every year tax-free. Reinvest in same fund to reset cost basis higher.