Capital gain tax in India is levied on profits earned from the sale of capital assets such as property, shares, gold, or mutual funds. Gains are classified as short-term or long-term, depending on the holding period. Short-term capital gains (STCG) on listed shares are taxed at 15%, while other STCG are added to income and taxed as per slab rates. Long-term capital gains (LTCG) on listed shares exceeding ₹1.25 lakh are taxed at 12.5% from July 23, 2024. LTCG on other assets is taxed at 12.5% without indexation. Various exemptions are available under Sections 54 series.
Here are the key exemptions and updated tax rules for capital gains in FY 2024–25 (AY 2025–26) in India:
🧾 1. LTCG on Equity (Section 112A)
- Exemption: ₹1.25 lakh per FY (up from ₹1 lakh)
- Tax Rate:
- 10% for gains on or before July 22, 2024
- 12.5% for transfers on or after July 23, 2024
2. STCG on Equity (Section 111A)
- Tax Rate:
- 15% for transfers on or before July 22, 2024
- 20% for transfers on or after July 23, 2024
- No separate exemption limit.
3. LTCG on Non–Equity Assets (Real Estate, Gold, Unlisted Shares)
- Tax Rate: 12.5%, flat—indexation benefit removed for FY 2024–25
- No basic exemption limit (unlike equities).
4. Exemptions Under Sections 54 Series – Applicable to Real Estate/Assets
You can avoid/reduce LTCG tax by reinvesting gains under these sections:
| Section | Asset Sold | Reinvestment | Time Limit | Notes |
|---|---|---|---|---|
| 54 | Residential realty | Residential property | Before 1 year prior / 2 years post sale (construction within 3 years) | Max ₹10 crore cap |
| 54F | Any long-term asset (not house) | Residential house | Same as 54 | Proportionate exemption if partial reinvestment |
| 54EC | Long-term building/land | NHAI/REC bonds | Within 6 months, bond lock-in 5 years (₹50 lakh cap) | Or via Capital Gains Account Scheme if delayed |
| 54B | Agricultural land (non-rural) | Agricultural land | Within 2 years; hold new land 3 years | Deposit in CGAS if delay |
| 54D | Industrial land/building (compulsory acquisition) | Industrial property | Within 3 years |
5. Summary – FY 2024‑25 Changes
- LTCG exemption raised to ₹1.25 lakh for equities
- Uniform 12.5% LTCG across asset classes; indexation removed
- STCG on equity up to 20%
✅ What You Can Do
- Equity investors: Use ₹1.25 lakh LTCG exemption; expect 12.5% tax beyond that.
- Real estate investors: Reinvest under Sections 54/54F/54EC etc. to eliminate or defer LTCG.
-
Timing matters: Check if the sale date falls on/after July 23, 2024—impacts both rate and exemptions.