For FY 2026-27, short-term gains on listed shares and equity mutual funds (held 12 months or less) are taxed at a flat 20%. Long-term gains on them are taxed at 12.5%, and the first ₹1.25 lakh each year is tax-free. Most other assets become long-term after 24 months and are then taxed at 12.5% without indexation. Short-term gains on those assets are added to your income and taxed at your slab rate. Add 4% cess to every figure. Budget 2026 left all of these rates unchanged.
Capital Gains Tax Rates for FY 2026-27
The rates below have applied to transfers made on or after 23 July 2024, and Budget 2026 did not change them. Holding period is counted from the date you acquired the asset to the date you sold it.
| Asset | Long-term after | STCG rate | LTCG rate | Notes |
|---|---|---|---|---|
| Listed shares, equity mutual funds, business trust units (STT paid) | 12 months | 20% | 12.5% | First ₹1.25 lakh of LTCG a year is exempt |
| Gold ETFs, listed bonds and other listed securities | 12 months | Slab rate | 12.5% | No exemption, no indexation |
| Land and buildings | 24 months | Slab rate | 12.5% | Bought before 23 Jul 2024: the lower of 12.5% or 20% with indexation (residents) |
| Physical gold, silver, jewellery, unlisted shares | 24 months | Slab rate | 12.5% | No indexation |
| Debt mutual funds bought on or after 1 Apr 2023, market-linked debentures | Never | Slab rate | Slab rate | Always treated as short-term |
All rates are before surcharge and the 4% Health and Education Cess. Surcharge on the 20% and 12.5% gains is capped at 15%.
What Changed on 1 April 2026 (and What Didn't)
FY 2026-27 is the first year under the Income-tax Act, 2025, which replaced the Income-tax Act, 1961. The tax on capital gains is almost the same as before, but some of the wording and section numbers are new:
- "Tax year" replaces previous year and assessment year. A sale on 10 October 2026 falls in tax year 2026-27. Under the old Act this would have been FY 2026-27 (AY 2027-28).
- New section numbers. The 20% STCG rule (old section 111A) is now section 196. The 12.5% LTCG rule for other assets (old 112) is section 197. The ₹1.25 lakh equity exemption (old 112A) is section 198. Old numbers still apply to sales made up to 31 March 2026.
- Rates unchanged. Budget 2026 kept STCG at 20%, LTCG at 12.5% and the exemption at ₹1.25 lakh.
- Share buybacks. From 1 April 2026, money you receive when a company buys back your shares is taxed as capital gains, with the normal holding-period rules and rates. Before that, it was taxed as a dividend. Promoters pay an additional tax on buybacks.
- STT on derivatives went up. From 1 April 2026, STT is 0.05% on futures and 0.15% on options. STT on buying and selling shares for delivery did not change.
- Cost Inflation Index. The CII for 2026-27 is 384 (CBDT Notification 85/2026). It is used for the property indexation option explained below.
Short-Term Capital Gains (STCG) Tax
A gain is short-term if you sell listed shares or equity funds within 12 months, or most other assets within 24 months. How it is taxed depends on the asset:
- Equity (STT paid): a flat 20%, whatever your income. Even someone in the 5% slab pays 20% on these gains, once the unused basic exemption has been used (see below).
- Everything else: your slab rate. The gain is added to your salary and other income and taxed at 0% to 30% under the new regime slabs.
So whether equity or slab-rate STCG costs more depends on your income. Here is the tax on a ₹2 lakh short-term gain at different levels of other income, from our calculator:
| Other taxable income | ₹2L equity STCG (20%) | ₹2L slab-rate STCG |
|---|---|---|
| ₹6,00,000 | ₹41,600 | ₹0 |
| ₹10,00,000 | ₹41,600 | ₹0 |
| ₹15,00,000 | ₹41,600 | ₹36,400 |
| ₹25,00,000 | ₹41,600 | ₹62,400 |
Includes 4% cess. Slab-rate gains below ₹12 lakh of total income are covered by the rebate. The rebate never covers equity STCG.
If your income excluding the gain is below the ₹4 lakh basic exemption, residents can use the unused part against special-rate gains. Someone with ₹2 lakh of interest income and a ₹3 lakh equity STCG pays 20% only on ₹1 lakh. That comes to ₹20,800 with cess.
Long-Term Capital Gains (LTCG) and the ₹1.25 Lakh Exemption
LTCG on listed equity and equity funds is taxed at 12.5%, but only on the amount above ₹1,25,000 in a tax year. The exemption is shared across all your equity sales in the year, and unused exemption cannot be carried forward. Other long-term gains are taxed at 12.5% from the first rupee.
| Equity gain | Tax if long-term | Tax if short-term | Saved by holding past 12 months |
|---|---|---|---|
| ₹1,00,000 | ₹0 | ₹20,800 | ₹20,800 |
| ₹1,25,000 | ₹0 | ₹26,000 | ₹26,000 |
| ₹2,00,000 | ₹9,750 | ₹41,600 | ₹31,850 |
| ₹3,00,000 | ₹22,750 | ₹62,400 | ₹39,650 |
| ₹5,00,000 | ₹48,750 | ₹1,04,000 | ₹55,250 |
| ₹10,00,000 | ₹1,13,750 | ₹2,08,000 | ₹94,250 |
| ₹25,00,000 | ₹3,08,750 | ₹5,20,000 | ₹2,11,250 |
Resident with ₹15 lakh of other taxable income, new regime, including 4% cess.
Worked example: selling an equity fund
Priya has ₹18 lakh of taxable salary. She invested ₹6 lakh in an equity mutual fund and redeems it for ₹10 lakh after 20 months:
| Step | Amount |
|---|---|
| Capital gain (₹10,00,000 − ₹6,00,000) | ₹4,00,000 |
| Less annual exemption | − ₹1,25,000 |
| Taxable LTCG | ₹2,75,000 |
| Tax at 12.5% | ₹34,375 |
| Plus 4% cess | ₹1,375 |
| Total tax on the gain | ₹35,750 |
Had she redeemed after 11 months, the whole ₹4 lakh would be STCG at 20%: ₹83,200 with cess. Waiting nine more months saved her ₹47,450.
The ₹12 Lakh Rebate Trap
Under the new regime, residents with total income up to ₹12 lakh get a rebate of up to ₹60,000, so they pay no tax. Capital gains cause two problems here:
- The rebate cannot be used against tax on 20% or 12.5% gains. Even if your total income is ₹10 lakh, equity STCG is still taxed.
- The gains count towards the ₹12 lakh limit. If they take your total income above ₹12 lakh, you lose the rebate on your salary as well.
Example: Arjun has ₹11 lakh of taxable salary, so he pays no tax. He sells shares held for two years at a ₹2 lakh gain. His total income becomes ₹13 lakh. He pays ₹9,375 on the ₹75,000 of gain above the exemption. He also loses the rebate on his salary, which brings back ₹50,000 of tax. With cess the ₹2 lakh gain costs him ₹61,750, an effective rate of about 31%. Had he sold only enough to realise a ₹1 lakh gain, his total income would have stayed at ₹12 lakh and he would pay nothing.
Property: 12.5% or 20% With Indexation?
Budget 2024 removed indexation and cut the LTCG rate on property to 12.5%. For land or buildings acquired before 23 July 2024, resident individuals and HUFs can still pay the lower of two figures:
- 12.5% of the gain without indexation, or
- 20% of the gain with indexation. Indexed cost = cost × 384 ÷ CII of the year you bought.
Example: Meena bought a flat in FY 2015-16 (CII 254) for ₹30 lakh. She sells it in October 2026 for ₹70 lakh and pays ₹50,000 in brokerage. Her other taxable income is ₹10 lakh.
| Item | 12.5%, no indexation | 20% with indexation |
|---|---|---|
| Cost used | ₹30,00,000 | ₹45,35,433 |
| Taxable gain | ₹39,50,000 | ₹24,14,567 |
| Tax on the gain | ₹4,93,750 | ₹4,82,913 |
| Rebate lost on her ₹10L salary | ₹40,000 | ₹40,000 |
| Total extra tax incl. 4% cess | ₹5,55,100 | ₹5,43,830 |
Indexation wins by ₹11,270 here. For a flat bought in FY 2020-21 at the same prices, indexation would cost ₹6,91,134 against ₹5,55,100 without it. As a rule, indexation helps when the property was bought long ago and has risen in price slowly. The calculator compares both options for you.
To pay less, you can reinvest the gain in another house or put up to ₹50 lakh in specified bonds within six months. These exemptions were sections 54, 54EC and 54F of the old Act and carry over to the 2025 Act under new section numbers. If the buyer pays more than ₹50 lakh, they deduct 1% TDS, which you can claim against your final tax.
How to Calculate Capital Gains Tax, Step by Step
- Find the holding period from the purchase date to the sale date. Compare it with 12 or 24 months to decide whether the gain is short-term or long-term.
- Work out the gain: sale price − cost of acquisition − cost of improvement − transfer expenses such as brokerage or stamp duty.
- Apply exemptions: ₹1.25 lakh for equity LTCG, grandfathering for pre-2018 equity, or reinvestment exemptions for property.
- Apply the rate: 20%, 12.5%, or add the gain to your slab income.
- Add surcharge if total income exceeds ₹50 lakh (capped at 15% on special-rate gains), then 4% cess.
- Pay advance tax for the quarter in which you made the gain. Report it in Schedule CG of your return.
Legal Ways to Pay Less Capital Gains Tax
- Harvest ₹1.25 lakh of gains every year. Sell equity with ₹1.25 lakh of long-term gain and buy it back. This resets your cost and uses an exemption you would otherwise lose.
- Wait past the 12-month mark. The rate drops from 20% to 12.5% and the exemption applies (see the table above).
- Book losses against gains. Short-term losses can be set off against both STCG and LTCG. Long-term losses can only be set off against LTCG. Unused losses carry forward for 8 years if you file your return on time.
- Watch the ₹12 lakh line. If a gain pushes your total income just over ₹12 lakh, splitting the sale across 31 March can keep your rebate.
- Reinvest property gains in a new house or 54EC-type bonds within the deadlines.
- Use a low-income family member's exemption. Gifts to adult children are not clubbed with your income, so their gains get their own ₹1.25 lakh exemption and basic exemption. Gifts to a spouse are clubbed with your income.
Related Tools & Guides
Frequently Asked Questions
Subtract the purchase cost and selling expenses from the sale price to get the gain. Decide if it is short-term or long-term from the holding period (12 months for listed equity, 24 months for most other assets). Then apply the rate: 20% for short-term equity, 12.5% for long-term gains (above ₹1.25 lakh for equity), or your slab rate for other short-term gains. Add 4% cess.
Short-term gains on listed shares and equity mutual funds sold within 12 months are taxed at a flat 20% plus 4% cess (20.8%), whatever your income slab. Budget 2026 did not change this rate. Under the Income-tax Act, 2025 it is in section 196 (old section 111A).
Yes, for listed shares, equity mutual funds and business trust units. The first ₹1,25,000 of long-term gains from these in a tax year is exempt, and only the excess is taxed at 12.5%. The exemption does not apply to property, gold, debt or unlisted shares.
No. The rebate of up to ₹60,000 cannot be used against tax on 20% STCG or 12.5% LTCG. The gains also count toward the ₹12 lakh limit, so a gain that takes your total income above ₹12 lakh can also remove the rebate on your salary. Short-term gains taxed at slab rates are covered by the rebate if total income stays within ₹12 lakh.
Only for land or buildings acquired before 23 July 2024, and only for resident individuals and HUFs. You pay the lower of 12.5% without indexation or 20% with indexation. For FY 2026-27 the Cost Inflation Index is 384. Other assets no longer get indexation.
More than 12 months for listed securities such as shares, equity mutual funds and gold ETFs. More than 24 months for property, unlisted shares, physical gold and other assets. Debt mutual funds bought on or after 1 April 2023 never qualify and are always taxed at slab rates.
The rates did not change: 20% STCG and 12.5% LTCG, with the ₹1.25 lakh equity exemption. Budget 2026 made share buyback proceeds taxable as capital gains from 1 April 2026 and raised STT on futures and options. The new Income-tax Act, 2025 renumbered the sections from the same date.
For resident individuals under the new tax regime in tax year 2026-27. Includes the ₹1.25 lakh exemption, unused basic exemption, the ₹12 lakh rebate, surcharge (without marginal relief) and 4% cess. It does not cover the old regime, NRIs (TDS and treaty rules), grandfathered pre-2018 equity cost, set-off of losses, reinvestment exemptions or business income from trading. Check with a chartered accountant before filing.