Selling shares, mutual fund units, gold or property brings a capital gains question with it. The rules were simplified significantly from 23 July 2024, and Budget 2026 made a further change to how share buybacks are taxed. Knowing the current capital gains tax rates, holding periods and exemptions lets you plan the timing of a sale and set aside the right amount of tax.
From 1 April 2026 the Income-tax Act 2025 applies and section numbers have changed. For familiarity, this guide uses the older section references that most people still recognise; the substance of the rates described below carries forward.
Key takeaways
- Listed shares and equity mutual funds become long-term after 12 months; most other assets after 24 months.
- Long-term gains are taxed at 12.5% without indexation for most assets; listed equity gains get an annual exemption of ₹1.25 lakh.
- Short-term gains on listed equity (where STT is paid) are taxed at 20%; other short-term gains are taxed at slab rates.
- Resident individuals and HUFs selling land or buildings bought before 23 July 2024 can compare 12.5% without indexation with 20% with indexation.
- Reinvestment exemptions under sections 54, 54F and 54EC remain valuable for property sellers.
Holding periods: short term or long term?
| Asset | Long-term if held for more than |
|---|---|
| Listed equity shares, equity-oriented mutual funds, units of business trusts | 12 months |
| Other listed securities (such as listed bonds) | 12 months |
| Land, buildings, unlisted shares, gold, jewellery, other assets | 24 months |
| Specified mutual funds (mostly debt), unlisted bonds and debentures, market-linked debentures | Always treated as short term |
The last row matters: gains on debt-oriented mutual fund units bought on or after 1 April 2023 are taxed at slab rates, whatever the holding period.
Current capital gains tax rates
| Type of gain | Rate |
|---|---|
| Long-term gain on listed equity and equity funds | 12.5% on gains above ₹1.25 lakh a year |
| Short-term gain on listed equity and equity funds (STT paid) | 20% |
| Long-term gain on property, unlisted shares, gold and other assets | 12.5% without indexation |
| Short-term gain on other assets | Slab rates |
| Specified mutual funds, unlisted bonds, market-linked debentures | Slab rates |
Surcharge and 4% health and education cess apply on top. Surcharge on long-term and short-term equity gains is capped at 15%.
Grandfathering for older equity holdings
For listed shares and equity funds bought before 1 February 2018, the cost can be taken as the higher of actual cost and the fair market value on 31 January 2018 (limited to the sale price). This protects gains that accrued before long-term gains on equity became taxable.
Property sales: the pre-July 2024 choice
Indexation was withdrawn from 23 July 2024. For land or buildings acquired before that date, resident individuals and HUFs can compute tax both ways and pay the lower:
- 12.5% on the gain without indexation, or
- 20% on the gain with indexation.
A simple example: a flat bought in 2012 for ₹40 lakh is sold in 2026 for ₹1.2 crore. Without indexation the gain is ₹80 lakh, and tax at 12.5% is ₹10 lakh. With indexation the gain would be much lower, and tax at 20% on that lower gain may work out cheaper. Always run both computations with the actual cost inflation index figures before filing.
Non-residents do not get this choice and pay 12.5% without indexation. Buyers must deduct TDS on property purchased from NRIs; see our guide on NRI property sales and TDS.
Share buybacks after Budget 2026
From 1 October 2024 to 31 March 2026, the entire buyback proceeds were taxed as dividend in the shareholder’s hands. From 1 April 2026, buybacks are again taxed as capital gains, so only the difference between the buyback price and the cost of acquisition is taxable. Promoters face an additional levy that raises their effective rate. If you tendered shares in a buyback in either period, check which regime applies to the date of the buyback.
Exemptions that reduce capital gains tax
The main reinvestment reliefs for long-term gains are:
- Section 54 — gain on sale of a residential house, reinvested in another residential house in India within the prescribed time. The exemption is capped at ₹10 crore.
- Section 54F — gain on sale of any other long-term asset (such as shares or land), where the net sale consideration is invested in a residential house. Conditions apply on the number of houses already owned.
- Section 54EC — gain on land or buildings invested in specified bonds within six months, up to ₹50 lakh, with a five-year lock-in.
- Capital Gains Account Scheme — if the new house is not bought before the return due date, the unused amount can be deposited in this scheme with a bank to keep the exemption alive.
Keep purchase deeds, improvement bills, brokerage statements and bank records for every claim.
Practical points before you file
- Match your AIS. Sale transactions reported by brokers, registrars and sub-registrars appear in the Annual Information Statement. Differences should be explained or corrected.
- Set off losses correctly. Short-term losses can be set off against both short-term and long-term gains; long-term losses only against long-term gains. Unused losses carry forward for eight years if the return is filed on time.
- Rebate limits. The section 87A rebate under the new regime cannot be used against tax on special-rate gains such as listed equity gains.
- Advance tax. Large gains during the year may need advance tax in the quarter of sale to avoid interest.
- Choose the right form. Capital gains generally require ITR-2 (or ITR-3 if you also have business income).
For the wider changes under the new law, read our overview of the tax year concept under the Income-tax Act 2025.
Frequently asked questions
What is the long-term capital gains tax rate on shares in India?
12.5% on gains above ₹1.25 lakh a year for listed equity shares and equity mutual funds held for more than 12 months, plus applicable surcharge and cess.
Is indexation still available on property?
Only as an option for resident individuals and HUFs selling land or buildings acquired before 23 July 2024, where they may pay 20% with indexation instead of 12.5% without it.
How are debt mutual funds taxed now?
Units of specified (mostly debt) mutual funds bought on or after 1 April 2023 are taxed at slab rates regardless of holding period.
How much can be invested in 54EC bonds?
Up to ₹50 lakh, within six months of the sale of land or buildings, with a five-year lock-in.
If you are planning a sale of property or investments and would like a clear tax computation in advance, we would be glad to help.
This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.