Capital Gains Tax After the 2024 Changes

When you sell an investment for more than you paid, the profit is a capital gain. India’s rules changed significantly in the July 2024 budget.

Listed shares and equity mutual funds

• Short-term (held 12 months or less): taxed at 20 percent (up from 15 percent).
• Long-term (held more than 12 months): taxed at 12.5 percent (up from 10 percent) on gains above 1.25 lakh rupees a year (up from 1 lakh).

Property and other assets

• Long-term capital gains on assets like property, gold and unlisted shares were generally set at 12.5 percent, without indexation.
• Indexation previously allowed investors to adjust purchase prices for inflation, reducing taxable gains. Its removal increases tax for many long-held assets.
• After concerns, the government allowed individuals and HUFs who bought property before 23 July 2024 to choose between 12.5 percent without indexation or 20 percent with indexation, whichever is lower.

Holding periods

• Listed securities: more than 12 months for long-term.
• Most other assets, including property: more than 24 months.

Debt mutual funds

Since April 2023, gains on debt mutual funds bought after that date are taxed at your income tax slab rate, regardless of holding period.

Ways to reduce capital gains tax legally

• Use the 1.25 lakh annual exemption for equity gains.
• Hold investments longer for lower long-term rates.
• Offset losses against gains.
• For property, reinvest in another home or specified bonds under exemption rules.