Income tax · Capital gains and property
When is a capital gain long-term, and at what rate is it taxed?
Short answer
Listed shares and equity mutual funds become long-term after 12 months; property, gold, unlisted shares and most other assets after 24 months. On transfers from 23 July 2024, long-term gains are taxed at 12.5% (listed equity gains are exempt up to ₹1.25 lakh a year) and short-term gains on listed equity at 20%. Other short-term gains are taxed at your slab rate.
The rules below are the same under the Income-tax Act, 1961 (sales up to 31 March 2026) and the Income-tax Act, 2025 (sales from 1 April 2026). Section numbers are given for both: the 1961 Act section first, then the 2025 Act section.
Holding periods
The meaning of a short-term capital asset is in section 2(42A) of the 1961 Act (now section 2(101) of the 2025 Act).
| Asset | Long-term if held for more than |
|---|---|
| Listed shares, equity-oriented mutual funds, units of business trusts | 12 months |
| Land, buildings, gold, jewellery, unlisted shares, debt funds bought before 1 April 2023, other assets | 24 months |
The holding period runs from the date of acquisition to the date of transfer. For inherited or gifted assets, the previous owner's holding period is included.
Rates for transfers on or after 23 July 2024
| Gain | Rate |
|---|---|
| Long-term, listed equity and equity funds (section 112A, now section 198) | 12.5% on gains above ₹1.25 lakh a year |
| Long-term, other assets including property (section 112, now section 197) | 12.5%, generally without indexation |
| Short-term, listed equity and equity funds (section 111A, now section 196) | 20% |
| Short-term, other assets | Your slab rate |
Surcharge and 4% cess apply on top. Debt mutual funds and market-linked debentures bought on or after 1 April 2023 are taxed at slab rates, whatever the holding period.
Property bought before 23 July 2024
Resident individuals and HUFs selling land or buildings bought before 23 July 2024 can pay the lower of 12.5% without indexation or 20% with indexation. See the answer on indexation.
Ways to reduce or defer the tax
Long-term gains can be exempted, subject to conditions, by reinvesting in a residential house (section 54 of the 1961 Act, now section 82 of the 2025 Act, for gains from a house; section 54F, now section 86, for gains from other assets). Gains from land or buildings can also be exempted by investing in specified bonds within six months (section 54EC, now section 85, up to ₹50 lakh). Unused gains can be parked in the Capital Gains Account Scheme until the due date of the return.
Estimate the tax on shares with the equity gains calculator, and on property with the property capital gains calculator.
Legal basis
- Sections 2(42A), 111A, 112 and 112A, Income-tax Act, 1961, as amended by the Finance (No. 2) Act, 2024
- Sections 2(101), 196, 197 and 198, Income-tax Act, 2025 (tax year 2026-27 onwards)
- Sections 54, 54EC and 54F, Income-tax Act, 1961, now sections 82, 85 and 86, Income-tax Act, 2025
Official sources
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