Capital Gains Tax in India 2025: STCG, LTCG and Indexation Rules Explained

The July 23, 2024 Pivot: What Changed

Before July 23, 2024, India's capital gains framework had multiple inconsistent rates: equity STCG at 15%, equity LTCG at 10% above ₹1 lakh, property LTCG at 20% with indexation, and separate treatments for gold, debt funds, and unlisted shares. The Finance (No. 2) Act, 2024 unified this significantly — at the cost of higher rates on some assets and the removal of inflation protection through indexation.

Use the Capital Gains Tax Calculator India — LTCG & STCG to apply these points to your figures or facts.

Every capital gains calculation for FY 2025-26 must identify whether the asset was sold before or on/after July 23, 2024. Sales before this date follow the pre-amendment rates. For most taxpayers filing AY 2026-27 returns, all relevant transactions will fall under the new framework.

Holding Period: What Qualifies as Long-Term?

Capital Gains Tax Rates: FY 2025-26 Complete Table

Surcharge note: For LTCG under Sections 111A and 112A, the maximum surcharge is capped at 15% even for incomes above ₹5 crore. For Section 112 (property/gold LTCG), normal surcharge rates up to 37% apply. Health and Education Cess of 4% applies on all capital gains tax.

Indexation: What Survives, What Doesn't

Indexation adjusts a property's purchase cost upward using the Cost Inflation Index (CII), reducing the computed capital gain. The Finance (No. 2) Act, 2024 removed this benefit for most assets transferred on or after July 23, 2024 — with one critical grandfathering exception for immovable property.

Grandfathering clause for immovable property: Resident individuals and HUFs selling land or buildings acquired before July 23, 2024 may choose whichever is lower between:

• Option A: 12.5% LTCG tax calculated without indexation (on actual purchase price)
• Option B: 20% LTCG tax calculated with indexation using the applicable CII ratio

This option does not apply to companies, LLPs, or non-resident individuals selling property in India. For new purchases (on/after July 23, 2024), only Option A (12.5% without indexation) is available.

Cost Inflation Index (CII) — Selected Values

CBDT notified CII = 376 for FY 2025-26 via Notification No. 70/2025 (July 1, 2025). Base year: FY 2001-02 = 100.

The earlier the purchase year, the higher the indexed cost multiplier, and the more likely Option B (20% with indexation) produces lower tax. Always compute both options — use our Capital Gains Calculator for instant comparison.

Worked Example 1: Property Sale (FY 2025-26)

Riya purchased a flat in FY 2015-16 for ₹40,00,000 and sold it in FY 2025-26 for ₹90,00,000. Property was acquired before July 23, 2024, so she can choose between both options.

For property purchased in FY 2010-11 or earlier, the indexed multiplier exceeds 2.25× and Option B savings are substantially larger. Always run the numbers before filing.

Worked Example 2: Equity LTCG (Section 112A)

Arjun invested ₹5,00,000 in a Nifty 50 index fund on June 1, 2023 and sold on October 15, 2025 for ₹8,20,000. Held more than 12 months — qualifies as LTCG under Section 112A. No indexation option available for equity.

• Total gain: ₹3,20,000
• Annual Section 112A exemption: ₹1,25,000
• Taxable LTCG: ₹1,95,000
• Tax at 12.5%: ₹24,375
• Health & Education Cess at 4%: ₹975
• Total tax payable: ₹25,350

Planning tip: The ₹1.25 lakh exemption resets on April 1 each year. Splitting the redemption across two financial years could have saved Arjun approximately ₹16,250 — by applying two ₹1.25 lakh windows instead of one.

Reinvestment Exemptions: Sections 54, 54F, and 54EC

LTCG on property can be reduced or deferred through qualified reinvestment. These exemptions apply to LTCG only and are available regardless of which income tax regime (old or new) you use — they govern the transaction, not the regime choice.

Set-Off and Carry-Forward of Capital Losses

• STCG losses can be set off against both STCG and LTCG of the same year.
• LTCG losses can only be set off against LTCG — not against STCG or ordinary income.
• Unabsorbed capital losses can be carried forward for 8 assessment years, provided the ITR is filed on or before the due date (31 July 2026 for ITR-1/ITR-2 individuals; 31 August 2026 for non-audit ITR-3/ITR-4 filers).
• Filing a belated return forfeits the right to carry forward capital losses.

Special Treatment: Sovereign Gold Bonds vs Physical Gold

SGB maturity proceeds are completely exempt from capital gains tax — making them the most tax-efficient gold holding. Note that the RBI has not issued new SGB tranches since January 2024. Existing SGB holders continue to benefit from the maturity exemption.