Capital Gains Tax Rates 2026-27 – Shares, Mutual Funds and Property under the New Act
- Long-term capital gains are taxed at 12.5% (section 197); on listed equity shares and equity mutual funds where STT is paid, the first ₹1,25,000 of gains in a year is not taxed (section 198).
- Short-term gains on listed equity and equity funds with STT paid are taxed at 20% (section 196).
- Land or buildings bought before 23 July 2024 get the lower of 12.5% without indexation and 20% with indexation for resident individuals and HUFs.
Capital gains are the profit from selling a capital asset, such as shares, mutual-fund units, gold or property. Section 67 charges them to tax in the year of transfer, and section 72 explains the computation: full value of consideration, minus expenses on the transfer, minus cost of acquisition and cost of improvement.
Rates at a glance
| Gain | Rate | Section |
|---|---|---|
| Long-term gain on listed equity shares, equity-oriented fund units or business-trust units, STT paid | 12.5% on gains above ₹1,25,000 a year | 198 |
| Other long-term gains | 12.5% | 197 |
| Short-term gain on listed equity shares, equity-oriented fund units, business-trust units, STT paid | 20% | 196 |
| Other short-term gains | Added to total income and taxed at normal rates | – |
Tax rates are before health and education cess and surcharge, which come from the Finance Act.
Example: listed shares
You sell listed equity shares held for more than the long-term period and earn a gain of ₹3,00,000 (STT paid). Under section 198 tax is 12.5% on ₹3,00,000 − ₹1,25,000 = ₹1,75,000, which is ₹21,875.
Property bought before 23 July 2024
For a resident individual or HUF selling land or a building acquired before 23 July 2024, section 197(3) ignores any excess of the 12.5% tax over the tax computed at 20% using the indexed cost of acquisition and indexed cost of improvement. In simple terms you pay the lower of the two methods. Indexation uses the Cost Inflation Index defined in section 72(8).
Gains and your basic exemption limit
If you are a resident individual or HUF and your income other than the long-term gain is below the basic exemption limit, the long-term gain is reduced by the shortfall before the tax is calculated (sections 197(2) and 198(3)).
Cost of property you inherited or received as a gift
Section 73 says that where you got an asset by gift, will, succession or inheritance, your cost of acquisition is the cost to the previous owner, plus improvement costs incurred by the previous owner or you.
Ways to avoid tax on a gain
- Section 82: If an individual or HUF sells a residential house and has long-term gains, the gain is exempt to the extent it is used to buy another residential house in India within one year before or two years after the sale, or to build one within three years. Unspent gain must be deposited in a notified account before the return due date. If the gain is up to ₹2 crore you may choose two houses, once in a lifetime. Amounts above ₹10 crore are ignored.
- Section 85: Long-term gains from land or buildings invested within six months in specified bonds (NHAI or REC, redeemable after five years) are exempt up to ₹50 lakh of investment. If the bonds are sold or converted within five years, the gain becomes taxable.
Capital losses
A long-term loss can be set off only against long-term gains, a short-term loss against any capital gain (section 108). Unadjusted losses can be carried forward for up to eight tax years (section 111).
Still have a question? Ask TAXBADI – get an answer from the Act, Rules and forms, with the exact sections cited.
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This guide is for general information and is not tax advice. Tax figures are before health and education cess unless stated. The law and the official notifications are the final authority – see our Disclaimer. Found a mistake? Tell us.