Capital Gains Tax in India: Shares, Mutual Funds and Property

By Paarth · Published 20 October 2026 · Updated 20 October 2026

Sell something for more than you paid and the profit is a capital gain. How much tax you pay depends on what you sold and how long you held it. Listed shares and equity funds held over 12 months pay 12.5% on gains above ₹1.25 lakh; held for less, they pay 20%.

Rules and rates here are as understood in October 2026. The Income-tax Act, 2025 has applied from 1 April 2026 and renumbers many sections, so the old section numbers used below (80C, 80D, 24(b), 194A and so on) may appear under new numbers on current forms. The amounts and ideas are what matter; confirm details on the Income Tax Department website.

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The two questions that decide your tax

First, what did you sell? Second, how long did you hold it? Gains are short-term if you sold within the holding limit and long-term if you held longer. The limit is 12 months for listed shares and equity mutual funds, and 24 months for property, unlisted shares and gold.

Current rates at a glance

Listed shares and equity funds, short-term: 20%
Listed shares and equity funds, long-term: 12.5% on gains above ₹1.25 lakh a year
Property, gold and unlisted shares, long-term: 12.5%, no exemption limit
Debt mutual funds bought on or after 1 April 2023: taxed at your slab rate, whatever the holding period

Add 4% health and education cess on the tax. Short-term gains on property and gold are taxed at your slab rate.

Example: selling shares

You bought shares for ₹5,00,000, sold them for ₹9,00,000 and paid ₹2,000 in expenses. The gain is ₹3,98,000.

Held 2 years 8 months (long-term): the first ₹1,25,000 is exempt, so ₹2,73,000 is taxed at 12.5%. Tax is ₹34,125, or ₹35,490 with cess.
Held under 12 months (short-term): the whole gain is taxed at 20%, which is ₹79,600, or ₹82,784 with cess.

Waiting a few months more saved ₹47,294 here. That is why the holding period is worth checking before you sell.

Try your own numbersEnter buy and sell dates and see the taxOpen Capital Gains Calculator →

Using the ₹1.25 lakh exemption each year

The ₹1.25 lakh exemption resets every financial year and does not carry forward. Some investors sell and rebuy units to book long-term gains up to the limit, which can save up to ₹16,250 in tax a year (12.5% plus cess on ₹1.25 lakh). Remember that selling and rebuying has costs of its own, such as brokerage and exit loads, and it changes your purchase price going forward.

Example: selling a property

A flat bought for ₹60,00,000 in August 2024 and sold for ₹75,00,000 with ₹1,00,000 of costs gives a gain of ₹14,00,000. Held over 24 months, it is taxed at 12.5%: ₹1,75,000, or ₹1,82,000 with cess.

If the flat was bought before 23 July 2024, you can compare two routes. As an illustration, take a flat bought in April 2020 for ₹60,00,000 and sold for ₹90,00,000, with costs of ₹1,00,000, and assume cost inflation index values of 301 and 376. Without indexation the gain is ₹29,00,000 and tax is ₹3,77,000 with cess. With indexation the gain falls to about ₹14,04,983 and the tax at 20% is about ₹2,92,237. Indexation wins here, but it will not always; the calculator lets you compare both with the official index values.

Ways to reduce or defer the tax

Reinvest in a house or bonds. Sections 54, 54F and 54EC give exemptions if you reinvest gains in a residential house or specified bonds within set time limits. The conditions are strict, so read them or ask a tax professional first.
Set off losses. Selling a loser can cancel part of a gain in the same year.
Hold a little longer. Crossing the 12 or 24 month mark can change the rate sharply, as the share example shows.

If you are choosing between investments, SIP vs FD shows how returns and tax interact, and the income tax calculator shows how your slab affects debt fund gains.

Frequently asked questions

What is the tax on selling shares or equity mutual funds?

Gains on listed shares and equity mutual funds held 12 months or less are short-term and taxed at 20%. Held longer, they are long-term and taxed at 12.5% on the total gain above ₹1.25 lakh in the financial year. A 4% cess is added to both.

Is there still indexation on property?

For property bought on or after 23 July 2024, no; the long-term gain is taxed at 12.5% without indexation. For property bought before that date, an individual or HUF can choose between 12.5% without indexation and 20% with indexation, whichever gives lower tax.

Can I set off a capital loss?

Yes. A short-term loss can be set off against both short-term and long-term gains. A long-term loss can be set off only against long-term gains. Unused losses can be carried forward for 8 years, but only if you file your return on time.

Disclaimer: This article is for general education only and is not financial, investment, tax or legal advice. Figures are illustrative, and rates and rules change. Check official sources and consult a SEBI-registered investment adviser or qualified tax professional before you decide.

Paarth builds the free calculators on PropertiesOnline.in and has been writing about money and everyday tools in India for over 15 years. These guides are practical and honest — not investment advice. Invest based on your own goals or a qualified adviser's guidance.