On listed shares and equity mutual funds, gains on units held over 12 months are taxed at 12.5% above ₹1.25 lakh a year; gains within 12 months are taxed at 20%. Debt fund gains on units bought since April 2023 are taxed at your slab rate. Budget 2026 did not change these rates.
Rates at a glance
| Asset | Short-term (rate) | Long-term (rate) |
|---|---|---|
| Listed shares, equity funds (over 65% equity) | Up to 12 months: 20% | Over 12 months: 12.5% on gains above ₹1.25 lakh |
| Debt funds bought on/after 1 April 2023 | Slab rate, whatever the holding period | Slab rate |
| Property | Up to 24 months: slab rate | Over 24 months: 12.5% without indexation* |
*For property bought before 23 July 2024, individuals can pay the lower of 12.5% without indexation or 20% with indexation. A 4% cess is added to all rates.
Worked examples
| Case | Tax |
|---|---|
| Sold equity fund units held 3 years, gain ₹2,00,000 | (₹2,00,000 – ₹1,25,000) × 12.5% = ₹9,375 + cess = ₹9,750 |
| Sold shares held 8 months, gain ₹1,00,000 | ₹1,00,000 × 20% = ₹20,000 + cess = ₹20,800 |
Work out your own figures with the capital gains tax calculator.
Rules that catch people out
- SIPs: every instalment has its own purchase date. When you redeem, the oldest units are sold first, so some units may still be short-term.
- ₹1.25 lakh exemption is per person per year and covers long-term equity gains only.
- Rebate: the new-regime rebate that makes income up to ₹12 lakh tax-free generally cannot be used against these special-rate gains.
- Losses: short-term losses can be set off against short- or long-term gains; long-term losses only against long-term gains. Unused losses carry forward for 8 years if you file your return on time.
- Shares bought before 1 February 2018: gains up to 31 January 2018 are protected (grandfathered).
Legal ways to pay less
- Harvest the ₹1.25 lakh each year: book long-term gains up to the limit and reinvest.
- Hold past 12 months where possible – 12.5% beats 20%.
- Book losses on weak holdings before 31 March to set off against gains.
- Gains also count towards advance tax – pay instalments on time to avoid interest.
Good to know
The Income-tax Act, 2025 has renumbered the sections (old 111A and 112A), but the rates are unchanged. If your gains are large or involve property, ESOPs or foreign shares, take advice. For investing choices, see SIP vs lumpsum.