STCG vs LTCG: Capital Gains Tax in India Explained Simply

Capital gain = the profit you make when you sell an asset for more than you paid. India taxes it at different rates depending on (a) what the asset is and (b) how long you held it. Budget 2024 changed the rules significantly — here is the current picture.

Short-term vs long-term: the holding period

The cutoff depends on the asset:

| Asset | Short-term if held less than | Long-term if held more than | |---|---|---| | Listed equity shares / equity mutual funds | 12 months | 12 months | | Debt mutual funds (bought after April 2023) | Always short-term | — | | Debt mutual funds (bought before April 2023) | 36 months | 36 months | | Real estate | 24 months | 24 months | | Gold / jewellery | 24 months | 24 months | | Unlisted shares | 24 months | 24 months |

The rates (FY 2025-26 onwards, post Budget 2024)

### Equity and equity mutual funds (STT paid) - STCG: 20% flat (raised from 15% in July 2024) - LTCG: 12.5% on gains above ₹1.25L/year (raised from 10% in July 2024; exemption was ₹1L)

### Debt mutual funds (bought after April 1, 2023) - Taxed at your slab rate — no indexation, no LTCG benefit.

### Real estate / gold / unlisted shares - STCG: Slab rate - LTCG: 12.5% without indexation OR 20% with indexation (property only, grandfathered for pre-July 2024 purchases)

### Crypto / VDAs - Flat 30% on gains, regardless of holding period - 1% TDS on every transaction above ₹50,000 - Losses CANNOT be set off against any other income

Example 1: Stock gains

Bought Reliance for ₹2,000 in Feb 2025. Sold for ₹2,800 in March 2026. Gain = ₹800/share. Held for 13 months → LTCG. Tax = ₹800 × shares × 12.5% (first ₹1.25L of annual LTCG is exempt).

Example 2: Mutual fund SIP

Invested ₹10,000/month for 5 years. Total ₹6L contributions. Current value ₹10L. Gain = ₹4L.

For each SIP instalment, the holding period is calculated separately (FIFO). If you redeem everything today: - Instalments from the first 4 years: LTCG at 12.5% - Instalments from last 12 months: STCG at 20%

Example 3: Property sale

Bought flat in 2015 for ₹40L. Sold in 2026 for ₹1.2Cr. Gain = ₹80L. Held > 24 months → LTCG. - Option A: 12.5% without indexation = ₹10L tax - Option B: 20% with indexation (using Cost Inflation Index) = typically ₹6-8L tax

You choose whichever is lower. Use Section 54 to reinvest in another house or Section 54EC bonds (REC/PFC) to avoid tax entirely.

The ₹1.25L equity LTCG exemption trick

You can realise ₹1.25L of equity LTCG every financial year tax-free. Disciplined investors "harvest" gains annually — sell and rebuy the same fund — to use up the exemption before they build up a large tax bill on a future lump-sum sale.

Calculate what you owe

Use our Capital Gains Calculator — enter asset type, purchase/sale dates, cost, sale price. It tells you STCG vs LTCG classification and exact tax owed.