Capital Gains Tax Calculator India — LTCG & STCG FY 2026-27

How Capital Gains Tax Works — Holding Periods, Asset Types, and the Finance Act 2024 Rate Changes

Capital gains tax applies when you sell a capital asset at a profit. The tax rate depends on two variables: (1) the asset type, and (2) the holding period. Finance Act 2024 (Budget 2024, effective 23 July 2024) changed the rates for equity significantly. Budget 2026 made no further change — the Finance Act 2024 rates apply for FY 2026-27 (AY 2027-28).

Equity shares and equity-oriented mutual funds (STT paid):

• STCG (held ≤ 12 months): 20% flat under Section 111A, regardless of your income slab
• LTCG (held > 12 months): 12.5% on gains above ₹1,25,000 per year under Section 112A, no indexation

Property and real estate:

• STCG (held ≤ 24 months): taxed at your income slab rate
• LTCG (held > 24 months, sold on or after 23 July 2024): 12.5% without indexation
• LTCG for property acquired BEFORE 23 July 2024 (transitional provision): Resident individuals and HUFs may compute tax as the lower of: (a) 12.5% without indexation, or (b) 20% with Cost Inflation Index indexation. This option was preserved under Finance Act 2024 for pre-July 2024 acquisitions. Verify current status at incometax.gov.in or with a CA — this is a specific transitional rule and its application depends on individual facts.

Debt mutual funds:

• Purchased on or after 1 April 2023: taxed entirely at income slab rate — no LTCG/STCG distinction, no exemption
• Purchased before 1 April 2023: LTCG (held > 36 months) at 20% with indexation; STCG at slab rate

Gold: LTCG (held > 24 months) at 12.5% without indexation (post-July 23, 2024). STCG at slab rate.

LTCG formula for equity: Tax = (Total LTCG for the year − ₹1,25,000) × 12.5%. The ₹1.25L exemption is per financial year, per individual, and resets on April 1. It applies to the aggregate of all equity gains across all stocks and equity MFs in the year.

Four Capital Gains Scenarios — Equity Holding Period, Property Indexation Choice, Debt Slab Rate, and Tax Harvesting

Scenario 1: Neeraj, 35, sells equity MF held 11 months vs 13 months — a ₹53,125 difference

Neeraj invested ₹5L in an equity mutual fund in March 2025. By February 2026 (11 months), the fund is worth ₹10L. Gain: ₹5L.

If sold in February 2026 (11 months — STCG): Tax = ₹5,00,000 × 20% = ₹1,00,000.

If sold in April 2026 (13 months — LTCG): Gain ₹5L. After ₹1.25L exemption, taxable = ₹3.75L. Tax = ₹3,75,000 × 12.5% = ₹46,875.

Waiting 2 months: saves ₹53,125. The cost of waiting: if the fund falls 5% in April, NAV drops from ₹10L to ₹9.5L — ₹50,000 loss in value. In this case, the tax saving (₹53,125) and market loss (₹50,000) roughly cancel. The decision depends on market conditions and the investor's view on near-term returns, but the math shows the 12-month threshold is material.

Scenario 2: Meena, 50, sells property bought in 2019 — indexation choice

Meena bought a flat in Pune in 2019 for ₹45L. She sells in January 2026 for ₹85L (held > 24 months, LTCG applies). Gain: ₹40L. She is a resident individual — the transitional provision for pre-July 2024 acquisition applies.

Option A (12.5% without indexation): Tax = ₹40,00,000 × 12.5% = ₹5,00,000.

Option B (20% with indexation): Assume CII for FY 2019-20 = 289; CII for FY 2025-26 = 363 (verify current CII at incometax.gov.in). Indexed cost = ₹45L × 363/289 = ₹56.5L. Indexed gain = ₹85L − ₹56.5L = ₹28.5L. Tax = ₹28,50,000 × 20% = ₹5,70,000.

In Meena's case, 12.5% without indexation (₹5L) is lower than 20% with indexation (₹5.7L) — she should choose Option A. The choice that benefits you depends on the actual CII values and your property's purchase year and price. Always compute both.

Scenario 3: Rohit, 42, equity gain ₹1.1L — tax harvesting opportunity

Rohit holds equity funds with unrealised LTCG of ₹1.1L. This is below the ₹1.25L annual exemption — entirely tax-free if realised in FY 2026-27. Instead of waiting, he redeems and immediately reinvests: his cost basis resets to the higher value. Next year, he starts from ₹0 unrealised gain instead of ₹1.1L, preserving the ₹1.25L exemption for future use. This 'tax gain harvesting' is legal, widely practised, and can save ₹15,000+ (12.5% on ₹1.1L that would otherwise accumulate). One caveat: exit loads apply to equity MFs redeemed within 1 year — ensure the fund is past its exit load period before harvesting.

Scenario 4: Sunita, 33, debt MF bought 2023 vs 2022 — why purchase date matters

Sunita has two debt fund investments: ₹3L invested in May 2022 (pre-April 2023), ₹3L invested in June 2023 (post-April 2023). Both now worth ₹3.5L each — ₹50,000 gain each. Both held > 36 months for the 2022 fund.

2022 fund (pre-April 2023 purchase, LTCG applies): Held > 36 months → LTCG rate applies. With indexation: assume CII 2022-23 = 331, 2026-27 = 389 (verify). Indexed cost = ₹3L × 389/331 = ₹3.53L. Indexed gain = ₹3.5L − ₹3.53L = negative → no capital gains tax on this unit.

2023 fund (post-April 2023 purchase): No LTCG concept — entire ₹50,000 gain is taxed at slab rate. At 30% slab: ₹15,000 tax. The one-year difference in purchase date determines whether the gain is tax-free or costs ₹15,000.

Capital Gains Rules — Section 112A, Section 111A, Exemptions Under Sections 54 and 54EC, and Grandfathering

Finance Act 2024 — summary of changes effective 23 July 2024:

1. STCG on listed equity and equity MF: 15% → 20% (Section 111A)
2. LTCG on listed equity and equity MF: 10% → 12.5% (Section 112A)
3. Annual LTCG exemption: ₹1,00,000 → ₹1,25,000
4. Indexation removed for property sold on/after 23 July 2024 — LTCG at 12.5% without indexation (with transitional option for pre-July 2024 acquisitions as noted)
5. Budget 2026 made no further change to these rates

Grandfathering rule for equity (Section 112A): For listed shares and equity MFs held before 31 January 2018 (when LTCG tax was reintroduced), the cost of acquisition is the higher of: (a) actual purchase price, or (b) fair market value (FMV) as on 31 January 2018. This protects gains that accrued before the tax existed. Example: shares bought in 2015 at ₹100, FMV on 31 January 2018 = ₹200, sold in 2026 at ₹300. LTCG = ₹300 − ₹200 (grandfathered cost) = ₹100/share, not ₹200/share. This rule applies when there is a conflict between actual and FMV — FMV as on 31 January 2018 is the grandfathered cost.

Section 54 — property reinvestment exemption: If you sell a residential property (held > 24 months) and use the LTCG (not the full sale proceeds) to purchase a new residential property within 2 years of sale or construct within 3 years, the LTCG invested is exempt from tax. Conditions: you must not own more than 2 residential properties at the time of sale; the exemption is limited to the gains reinvested, not total proceeds; excess gains are taxed at 12.5%. Capital Gains Account Scheme (CGAS) can be used to park gains until the new property is identified — verify current CGAS terms.

Section 54EC — bond investment exemption: Invest LTCG (from any capital asset, not just property) in notified bonds — currently NHAI (National Highways Authority of India) and REC (Rural Electrification Corporation) — within 6 months of sale. Exemption: up to ₹50L per financial year. Lock-in: 5 years. Interest earned on these bonds is taxable at slab rate. Bonds can be held to maturity — do not redeem early as it triggers tax on the exempted gains.

LTCG set-off rules: LTCG can be set off against LTCL (long-term capital losses) in the same year, or carried forward for 8 years (only against LTCG, not STCG or ordinary income). STCG under 111A cannot be set off against ordinary income. Losses from capital assets other than lottery/gambling can be carried forward — file ITR on time to carry forward losses (belated return forfeits carry-forward).

What Investors Get Wrong on Capital Gains Tax

Still using the old 15% STCG rate in post-tax return calculations. Finance Act 2024 raised STCG on equity from 15% to 20% effective 23 July 2024. Any return-on-investment model, SIP projection, or financial plan built before July 2024 that uses 15% STCG is now understating the tax drag on short-term trades by 5 percentage points. Update your models.

Treating the ₹1.25L LTCG exemption as per-transaction instead of per-year. The exemption applies to the aggregate of all long-term equity gains across all stocks, equity MFs, and ETFs in a financial year. If you book ₹80,000 LTCG on one fund in July and ₹70,000 on another in January, total LTCG = ₹1.5L. Taxable: ₹25,000 at 12.5% = ₹3,125 tax. Many retail investors book gains in pieces thinking each booking has its own ₹1.25L exemption — it does not.

Assuming debt MF LTCG rules still apply post-April 2023. Debt mutual funds purchased on or after 1 April 2023 are taxed entirely at slab rate — this change under Finance Act 2023 made debt MFs significantly less tax-efficient for investors in the 20–30% brackets. Investors who were using debt MFs for the old 20%-with-indexation benefit need to reassess: PPFAS and other hybrid funds, direct bonds, and target maturity debt ETFs (purchased pre-April 2023) now have tax advantages that new debt MF purchases do not.

Missing the Section 54EC 6-month deadline on property LTCG. To claim the bond investment exemption, ₹54EC bonds must be subscribed within 6 months of the property sale date — not the registration date, not the possession date, but the date of transfer. If you miss this window by even one day, the exemption is lost. Many sellers are caught by this deadline because the bond subscription process itself takes time. Initiate the process immediately after the sale agreement, not after registration.