Budget 2024 was the biggest tax overhaul for Indian investors in a decade. Equity LTCG raised from 10% to 12.5%. STCG raised from 15% to 20%. Indexation benefit removed from debt mutual funds and most property sales. Annual LTCG exemption raised from ₹1 lakh to ₹1.25 lakh. This guide covers every asset class with worked examples.
The big-picture table (FY 2025-26)
| Asset | Holding for LTCG | STCG rate | LTCG rate | Indexation |
|---|---|---|---|---|
| Listed equity / equity MFs | > 12 months | 20% | 12.5% (above ₹1.25L) | No |
| Debt mutual funds | Any (post Apr 2023) | Slab rate | Slab rate | No |
| Real estate | > 24 months | Slab rate | 12.5% | Removed (with grandfather) |
| Gold (physical / digital) | > 24 months | Slab rate | 12.5% | No |
| Gold ETF / Gold MF | > 12 months | Slab rate | 12.5% | No |
| SGB (Sovereign Gold Bonds) | Till maturity (8 yr) | Slab rate (if sold early) | EXEMPT at maturity | — |
| Foreign stocks / US equity | > 24 months | Slab rate | 12.5% | No |
| Crypto / VDA | N/A | Flat 30% + 1% TDS over ₹50k/yr | No | |
Equity capital gains — the most common case
STCG (≤ 12 months) = 20% flat. LTCG (> 12 months) = 12.5% on gains above ₹1.25 lakh per financial year.
Worked example — ₹20 lakh investment, sold after 18 months at ₹26 lakh:
- Gain: ₹6 lakh
- LTCG exemption: ₹1.25 lakh
- Taxable gain: ₹4.75 lakh
- Tax: 12.5% × ₹4.75 lakh = ₹59,375
The ₹1.25 lakh exemption is annual and per individual. A couple harvesting gains under both PANs can shelter ₹2.5 lakh per year.
Tax harvesting (legal optimisation)
Every March, sell equity positions with gains up to ₹1.25 lakh (use the exemption) and immediately rebuy. Resets cost basis higher, future gains shrunk. Saves 12.5% on ₹1.25 lakh = ₹15,625/year. Over 20 years of disciplined harvesting, that's ₹3+ lakh kept from tax.
Caveat: stamp duty + brokerage on the sell-rebuy cycle. Net savings ~₹14k/year after charges.
Debt MF — the silent killer
Post April 1, 2023: debt mutual funds taxed at marginal slab rate regardless of holding period. No LTCG, no indexation. A 30%-slab earner's 7% debt CAGR = 4.9% post-tax.
Funds bought BEFORE April 1, 2023 still get the old indexation regime for grandfathered holdings. Check the AMC's unit-allocation cost-basis record.
The debt-vs-FD calculus changed
Old regime (pre-2023): debt MF beat FD post-tax for slabs above 20%. New regime: identical post-tax outcome for slab earners. FDs back in play, especially senior citizen FDs at 7.5%+ (₹50k 80TTB deduction on interest).
Real estate LTCG — biggest Budget 2024 change
Pre-Budget 2024: Real estate LTCG = 20% with indexation benefit. Indexation could bring effective tax to 0-5% on long-held property.
Post-Budget 2024: 12.5% LTCG, indexation REMOVED. Grandfather clause: properties acquired BEFORE July 23, 2024 can opt for OLD regime (20% with indexation) OR new regime (12.5% flat) — whichever is lower.
Worked example — flat bought 2010 for ₹40 lakh, sold 2025 for ₹2 crore:
- Old regime: Cost indexed using CII (363/167) ≈ ₹87 lakh. Gain ≈ ₹1.13 cr. Tax @ 20% = ₹22.6 lakh.
- New regime: Gain = ₹1.6 cr (no indexation). Tax @ 12.5% = ₹20 lakh.
- Grandfather choice: New regime saves ₹2.6 lakh.
Result varies by property & year. Calculate both before deciding. Use the Capital Gains calculator.
Section 54 / 54EC — defer or eliminate tax
Sold real estate? Three legal ways to defer/eliminate LTCG:
- Section 54: Reinvest in residential property within 2 years (or construct within 3 years). Full deferral up to gain amount.
- Section 54EC: Buy NHAI/REC capital gains bonds within 6 months. Up to ₹50 lakh. 5-year lock-in. Interest at ~5.5% taxable.
- Section 54F: Reinvest sale proceeds (not just gain) in residential property. Useful when gain is large vs property cost.
Gold capital gains
Physical / digital gold: LTCG after 24 months at 12.5%. Gold ETFs and gold MFs: LTCG after 12 months at 12.5% (post Budget 2024 alignment with equity-fund holding period).
SGB at maturity (8 years): LTCG fully EXEMPT. The biggest tax-arbitrage in fixed-income gold.
Foreign equity / US stocks
Same Indian capital gains framework — 24-month threshold, 12.5% LTCG, slab STCG. Plus US dividend withholding at 25% (creditable against Indian tax via DTAA).
TCS at 20% on remittances above ₹7 lakh/year via Liberalised Remittance Scheme (LRS) — creditable against your Indian income tax, not an additional cost.
Crypto / VDA — special treatment
30% flat on gains. 1% TDS on every transaction above ₹50k/year. Losses cannot be set off against other income. Cannot be carried forward. Effective tax rate on crypto trading is much higher than equity.
STT, brokerage, and transaction costs
Brokerage charges are deductible against the gain. STT is allowed only if equity is sold through recognized stock exchange (otherwise not deductible). Use the brokerage calculator to compute net gain after all charges.
Loss set-off and carry forward
Equity STCG losses: set off against STCG or LTCG. Carry forward 8 years.
Equity LTCG losses: set off only against LTCG (intra or other assets). Carry forward 8 years.
Debt MF losses (post-Apr 2023): treated as regular income loss. Set off against any income except salary. Carry forward 8 years.
Use this aggressively. A ₹2 lakh equity loss in a bad year can shield ₹2 lakh of future gains over the next 8 years.
Filing requirements (ITR)
- Equity / mutual fund gains: ITR-2 or ITR-3 (Capital Gains Schedule).
- Business F&O income: ITR-3 (business income, not capital gains).
- Real estate sale: ITR-2 with Schedule CG.
- Crypto: ITR-2 with Schedule VDA (new from FY 2022-23).
- Foreign equity: ITR-2 with Schedule FA disclosure of foreign assets.
Use the Capital Gains calculator to compute tax. Pair with the Income Tax calculator for total liability.