The Investor & Capital Gains Tax Guide

If you hold mutual funds, shares, property, crypto, or even fixed deposits, the profit is taxed differently for each. The rates below are for FY 2026-27. They apply whether your main income is salary or freelance work. Check the Income-tax Act, 2025 and the CBDT threshold tables for the figures.

Official sources

Income-tax Act, 2025 (CBDT hub)
Crypto-asset reporting guidance note (Section 509, ITA 2025)
Threshold limits under the Income-tax Act
Section 115BAC, the new regime
Form 26AS and AIS, where TDS and capital gains show up
Income-tax return forms

The 23 July 2024 Cutoff

The Union Budget 2024 (effective 23 July 2024) changed the capital gains rates. If you bought an asset before that date and sold it after, the tax on that sale can use two different rates in the same year.

BEFORE 23 JUL 2024

Old rates apply

→

23 JUL 2024

Budget cutoff

→

AFTER 23 JUL 2024

New rates apply

Intra-FY split rule: If you bought equity before 23 Jul 2024 and sold after, the part of the gain that falls before the cutoff uses the old rates. The part after uses the new rates. Tax software (or a CA) calculates the split.

KEY RATE CHANGES

STCG on equity: 15% → 20%. LTCG on equity: 10% → 12.5% (exemption ₹1L → ₹1.25L). Real estate LTCG: 20% with indexation, or 12.5% without indexation (new). For property bought before 23 July 2024 the taxpayer can choose the lower of the two.

Holding Period Reference Table

Short-term or long-term depends on the asset and how long you held it. That decides the rate.

Asset	STCG	LTCG
Listed equity / equity MF (STT-paid)	≤ 12 months	> 12 months
Immovable property (land / building)	≤ 24 months	> 24 months
Unlisted shares	≤ 24 months	> 24 months
Gold / silver	≤ 24 months	> 24 months
Specified MF (≤35% equity)	Always slab rate	N/A (Sec 50AA)
VDA / crypto	Always 30% flat	N/A (Sec 115BBH)

Equity & Equity Mutual Funds

Equity gains use flat rates. Two conditions decide which section applies.

STCG 111A

20%

Sold within 12 months. STT must be paid on the sale.

LTCG 112A

12.5%

Held >12 months. First ₹1.25L exempt per year. STT required.

STT requirement: Sections 111A and 112A apply only when STT was paid on the sale. Off-market transfers without STT are taxed at slab rates.

Type	Rate	Surcharge Cap
STCG 111A	20%	15%
LTCG 112A	12.5%	10%

₹1.25L EXEMPTION

The first ₹1.25L of equity LTCG is tax-free each financial year. You can time redemptions to stay inside that limit.

Real Estate LTCG: The Choice

For property bought before 23 July 2024 you can choose between two ways of calculating long-term capital gains tax.

Acquisition	Option A	Option B	Choice
Pre 23 Jul 2024	12.5% (no indexation)	20% (with indexation)	Taxpayer chooses lower
On/after 23 Jul 2024	12.5% only — no indexation		No choice

Indexation (Option B): The purchase price is increased by the Cost Inflation Index (CII). That lowers the taxable gain. The government publishes a new CII table each year.

WHICH OPTION WINS?

If you held the property for many years, the indexation benefit under Option B (20%) often produces a lower tax. For property bought more recently, Option A (12.5%) is usually lower. A CA can run both calculations.

Debt Mutual Funds & Specified Funds

From 1 April 2023, debt mutual funds no longer get indexation. Gains are taxed at your slab rate, the same way as interest on an FD.

Fund Type	Tax Treatment
Post-Apr 2023 debt MF (≤35% equity)	Always slab rate (Sec 50AA)
Pre-2023 debt MF holdings	Grandfathered — old LTCG rates apply
Equity-oriented hybrid (>65% equity)	Treated as equity MF — 20% STCG / 12.5% LTCG

SECTION 50AA

"Specified mutual funds" means any fund with ≤35% equity. That covers debt funds, gold ETFs, and international funds. They are taxed at your slab rate, with no indexation and no LTCG rate.

Crypto & VDA: The Harshest Tax

Virtual Digital Assets (crypto, NFTs, tokens) are taxed at a flat 30%. Most of the usual reliefs do not apply. See the crypto reporting guidance note.

FLAT RATE

30%

✗ No set-off against other income

✗ No carry-forward of losses

✗ No indexation benefit

✗ No transaction fee deduction

✓ Cost of acquisition allowed

✗ Even VDA losses can't offset VDA gains

TDS on crypto: 1% TDS under Section 194S on every sale. Threshold: ₹50,000 (specified persons: ₹10,000).

Gift of crypto: Crypto worth more than ₹50,000 received from a non-relative is taxable under Section 56(2)(x) at slab rates.

SCHEDULE VDA

If you traded crypto in the year, file Schedule VDA in your ITR. It lists every transaction. Skipping it can lead to a notice.

Share Buybacks

From 1 October 2024, money you receive in a share buyback is treated as a deemed dividend and taxed at your slab rate. The cost of the shares becomes a capital loss.

BEFORE 1 OCT 2024

Buyback proceeds were tax-free (DDT paid by company). Cost = nil.

AFTER 1 OCT 2024

Buyback proceeds taxed as dividend at slab rates. Cost of shares → capital loss (carry forward 8 years).

Dividend Income

Dividend is taxed at your slab rate. Dividend Distribution Tax ended from AY 2020-21. Companies no longer pay tax on the dividend; the shareholder does.

Source	Tax Rate	TDS
Dividend from Indian companies	Slab rates	10% above ₹10K per company (194)
Dividend from foreign companies	Slab rates	No TDS

BUDGET 2025 CHANGE

The TDS threshold on dividends rose from ₹5,000 to ₹10,000 per company per year. Smaller dividends no longer attract TDS.

Interest Income

Interest from FDs, RDs, savings accounts, and bonds is taxed at your slab rate. TDS applies above the thresholds in the table.

Source	TDS 194A	Deduction
Savings account	No TDS	80TTA: ₹10K (non-senior, old only)
FD / RD	₹50K (₹1L senior)	80TTA: ₹10K / 80TTB: ₹50K (senior)
Bonds / debentures	₹5K threshold	None

80TTA vs 80TTB

80TTA: ₹10K deduction on savings interest. Non-seniors only. Old regime only. 80TTB: ₹50K deduction on all interest (FD, RD, savings). Senior citizens (60+) only. Old regime only. You cannot claim both.

Set-Off Rules: The Complete Matrix

Losses can be set off against gains only in the combinations listed below. Some losses cannot be used at all.

Loss Type	Can Offset Against	Carry Forward	New Regime
LTCG loss	LTCG only	8 years	Same
STCG loss	STCG + LTCG	8 years	Same
Business loss	Any head except salary	8 years	Same
House property loss	Any head (capped ₹2L)	8 years	HP only (ring-fenced)
VDA / crypto loss	NONE	NONE	Dead money

VDA LOSSES ARE DEAD MONEY

Crypto losses cannot be set off against any other income, including other crypto gains. They cannot be carried forward. A ₹5 lakh crypto loss produces no tax benefit in any year.

FILE ITR ON TIME

Carry-forward of losses is available only if you file the ITR by the due date (31 July for non-audit cases). Filing late removes the carry-forward.

Reinvestment Exemptions

You can claim exemption on capital gains if you reinvest them in the assets listed under each section. The rules differ by section.

Section	Asset Sold	Reinvest In	Lock-in	New Regime
54	Residential house	Residential house	3 years	Allowed (both regimes)
54B	Agricultural land	Agricultural land	3 years	Allowed (both regimes)
54D	Industrial land (compulsory acquisition)	Similar industrial land	3 years	Allowed (both regimes)
54EC	Any LTCG asset	NHAI/REC/IRFC/PFC bonds	5 years	Allowed (both regimes)
54F	Any non-house LTCG asset	Residential house	3 years	Allowed (both regimes)
54GB	Residential property	Eligible startup equity (DPIIT)	5 years	Allowed (both regimes)

NEW REGIME: EXEMPTIONS STILL APPLY

Sections 54–54GB reinvestment exemptions are available in both regimes. They are capital-gains exemptions, not Chapter VI-A deductions, so the new regime (section 115BAC) does not remove them. If you sell property and reinvest, the exemptions remain available.

Tax Loss Harvesting Strategy

You can sell a loss-making investment before 31 March to use the loss against gains in the same year, or carry it forward if you file on time.

DO THIS

✓ Sell losing equity before 31 March
✓ Use ₹1.25L LTCG exemption annually
✓ STCG losses offset both STCG + LTCG
✓ Rebuy after 1 day (no wash sale rule in India)

DON'T DO THIS

✗ Harvest VDA losses (dead money — no benefit)
✗ Forget to file ITR by due date (lose carry-forward)
✗ Harvest losses in the last week of March (timing risk)

NO WASH SALE RULE

India has no wash sale rule. You can sell a losing stock on 31 March and buy it back on 1 April. The loss is still allowed. (The US has a different rule.)

Run Your Numbers

Use our capital gains calculator to estimate STCG, LTCG, and set-off.

Capital Gains Calculator →