Capital gains tax guide for FY 2025-26 (AY 2026-27)
Capital gains arise when you sell shares, mutual funds, property, gold, bonds or any other capital asset for more than it cost you. The Finance (No. 2) Act, 2024 rewrote the rate structure for all transfers made on or after 23 July 2024, and those rules apply for the full financial year 2025-26. This guide covers the current rates, holding periods, worked examples, exemptions and how to report everything in your ITR.
What changed under the Finance (No. 2) Act, 2024
The CBDT's own FAQs describe the change as a simplification built on five pillars, all of which continue to apply in AY 2026-27:
- Only two holding periods remain: 12 months for listed securities and 24 months for every other asset.
- The short-term rate under section 111A rose from 15% to 20%.
- The long-term rate under section 112A rose from 10% to 12.5%, with the exemption limit raised from Rs 1 lakh to Rs 1.25 lakh.
- Indexation was removed for section 112 assets and the rate cut from 20% to 12.5%, subject to the resident land and building option explained below.
- Rollover exemptions under sections 54, 54F and 54EC were left unchanged.
Holding period: short-term vs long-term
| Asset | Long-term if held more than |
|---|---|
| Listed equity shares, equity mutual funds, listed bonds, REIT/InvIT units | 12 months |
| Immovable property (land or building) | 24 months |
| Unlisted shares | 24 months |
| Gold, jewellery, foreign shares and other capital assets | 24 months |
| Specified (debt) mutual funds bought on or after 1 April 2023 | Always short-term under section 50AA |
Capital gains tax rates for FY 2025-26 (AY 2026-27)
| Asset class | Short-term rate | Long-term rate |
|---|---|---|
| Listed equity shares / equity MF / business trust units (STT paid) | 20% (section 111A) | 12.5% above Rs 1.25 lakh (section 112A) |
| Immovable property | Slab rate | 12.5% without indexation; resident individuals/HUFs may opt for 20% with indexation if the property was acquired before 23 July 2024 |
| Unlisted shares | Slab rate | 12.5% without indexation |
| Gold, foreign shares, other assets | Slab rate | 12.5% without indexation |
| Specified (debt) mutual funds under section 50AA | Slab rate | Not applicable – always short-term |
Surcharge (capped at 15% on long-term gains and on 111A gains) and 4% health and education cess apply in addition to these rates.
Worked examples in rupees
Listed equity LTCG
Riya bought listed shares for Rs 3,00,000 in March 2024 and sold them for Rs 5,00,000 in December 2025. Held over 12 months, so the Rs 2,00,000 gain is long-term. After the Rs 1,25,000 exemption, Rs 75,000 is taxed at 12.5% = Rs 9,375, plus 4% cess = Rs 9,750.
Equity STCG
Arun bought equity mutual fund units in May 2025 and redeemed them in January 2026 at a gain of Rs 60,000. Held under 12 months, so section 111A applies: Rs 60,000 at 20% = Rs 12,000, plus cess Rs 480 = Rs 12,480.
Property with the indexation option
Meera, a resident, bought a flat in January 2015 (FY 2014-15, CII 240) for Rs 40,00,000 and sold it in November 2025 for Rs 90,00,000. Without indexation: gain Rs 50,00,000, tax at 12.5% = Rs 6,25,000. With indexation (CII 376 for FY 2025-26): indexed cost Rs 62,66,667, gain Rs 27,33,333, tax at 20% = Rs 5,46,667. She pays the lower figure because the flat was acquired before 23 July 2024.
Debt and specified mutual funds: section 50AA
Units of specified mutual funds (broadly, funds investing not more than 35% in domestic equity, bought on or after 1 April 2023) are deemed short-term capital assets whatever the holding period. The entire gain is added to your income and taxed at slab rates under the regime you choose – compare options on our old vs new tax regime guide. Debt fund units bought before 1 April 2023 follow the normal 24-month rule and the 12.5% long-term rate.
Set-off and carry-forward of capital losses
- Short-term capital loss can be set off against both short-term and long-term capital gains.
- Long-term capital loss can be set off only against long-term capital gains.
- Capital losses cannot be set off against salary, business or other income.
- Unabsorbed losses carry forward for 8 assessment years, but only if you file your ITR by the due date and complete Schedule CFL.
Exemptions: sections 54, 54F and 54EC
Rollover exemptions were not disturbed by the 2024 changes. Long-term gains from a house can be reinvested in another house (section 54), gains from any long-term asset can be invested in a house (section 54F), and gains from land or buildings can go into notified bonds up to Rs 50 lakh with a 5-year lock-in (section 54EC). Conditions, time limits and the Capital Gains Account Scheme are covered in our dedicated section 54, 54F and 54EC exemption guide.
Which ITR form for capital gains?
- ITR-2: individuals and HUFs with salary, house property, capital gains and other sources but no business income. Schedule CG captures asset-wise gains, and Schedule 112A needs scrip-wise details for STT-paid equity (mandatory for shares bought on or before 31 January 2018 with grandfathered cost).
- ITR-3: needed when you also have business or professional income, including F&O or intraday trading treated as business.
- ITR-1/ITR-4: permit only limited LTCG under section 112A up to Rs 1.25 lakh with no loss to carry forward; most capital gains cases fall outside them.
- Land or building transfers must be reported individually in Schedule CG with buyer details; other assets of the same type can be consolidated.
Remember advance tax: capital gains attract advance tax in the instalment falling after the date of sale, so a large property or equity gain in FY 2025-26 should have been paid through the June to March 2026 instalments to limit interest under sections 234B and 234C. Estimate your liability with our income tax calculator.
Common mistakes to avoid
- Applying the old 15%/10% equity rates or the Rs 1 lakh exemption – both changed from 23 July 2024.
- Claiming indexation on gold, unlisted shares or foreign assets – the 20% indexation option exists only for land or buildings of residents acquired before 23 July 2024.
- Treating debt mutual fund gains as long-term when section 50AA forces slab-rate short-term treatment.
- Ignoring AIS/TIS mismatches with broker statements, or forgetting buyback and ESOP special rules – see our buyback taxation and ESOP/RSU guides.
- Missing the due date and losing the right to carry forward capital losses.
- Forgetting that crypto gains are not normal capital gains – they follow the flat 30% regime in our crypto and VDA guide.
Frequently asked questions
What is the LTCG tax rate for FY 2025-26 (AY 2026-27)?
12.5% on listed equity above the Rs 1.25 lakh exemption under section 112A, and 12.5% without indexation on most other long-term assets under section 112.
What is the STCG rate on listed shares and equity mutual funds?
20% under section 111A where STT is paid, applicable to transfers on or after 23 July 2024.
What is the holding period for long-term capital gains now?
More than 12 months for listed securities and more than 24 months for every other asset, including property, unlisted shares and gold.
Can I still use indexation for property sold in FY 2025-26?
Only resident individuals and HUFs, and only for land or buildings acquired before 23 July 2024: tax is the lower of 12.5% without indexation or 20% with indexation.
How are debt mutual funds taxed in AY 2026-27?
Specified mutual fund units bought on or after 1 April 2023 are always short-term under section 50AA and taxed at your slab rate.
Which ITR form should I use for capital gains?
ITR-2 if you have no business income; ITR-3 if you do.
Get expert help with capital gains filing
All India ITR prepares Schedule CG and Schedule 112A, applies the property indexation option correctly, reconciles AIS with broker reports, reviews exemption claims and files the right ITR form for you.
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Related current ITR guides
More AY 2026-27 tax guides
Save tax: Home loan benefits · NPS (80CCD) · Donations (80G) · Education loan (80E) · Interest income (80TTA/80TTB) · Form 15G/15H · Capital gains exemptions (54/54F/54EC)
Investors and traders: F&O and intraday tax · ESOP and RSU tax · Share buyback tax · Foreign income and Schedule FA · Gift tax (56(2)(x)) · HUF taxation
Calculators and tools: Income tax calculator · Advance tax calculator · 80C tax-saving calculator · NPS calculator · Gratuity calculator · EPF calculator · Crypto tax calculator · HRA calculator
Filing and compliance: Section 87A rebate · Marginal relief · Form 10-IEA · PAN-Aadhaar link · AIS and TIS · ITR-U updated return · Discard ITR and condonation · TDS on rent and property · Income Tax Act 2025
Sources reviewed
- CBDT FAQs on the new capital gains tax regime (PIB, Ministry of Finance)
- Income Tax Department: Exemptions from capital gains
- Income Tax Department: File ITR-2 Online user manual
This guide reflects the law for FY 2025-26 (AY 2026-27) as reviewed on 10 June 2026. Rates, surcharge and exemption conditions depend on your residential status, the date of transfer and transaction facts; please verify your specific situation with an All India ITR expert before filing.
