Capital Gains on Shares, Mutual Funds and Property: Rates and Holding Periods

Capital gains rules were overhauled in July 2024, and the Finance Act, 2026 changed how share buybacks are taxed. Here is a clear summary of how gains are taxed now, for tax year 2026-27 under the Income-tax Act, 2025.

Short-term or long-term? Holding periods

Asset	Long-term if held for more than
Listed shares, equity mutual funds, listed units (REITs, InvITs), listed bonds	12 months
Everything else: property, unlisted shares, gold (physical), etc.	24 months
Debt mutual funds bought on or after 1 April 2023, unlisted bonds and debentures	Always taxed at slab rates, however long you hold them

Tax rates

Asset	Short-term gain	Long-term gain
Listed equity shares / equity mutual funds (STT paid)	20%	12.5% on gains above ₹1.25 lakh a year
Property (land, building)	Slab rate	12.5%, no indexation (see the residents’ option below)
Unlisted shares	Slab rate	12.5%, no indexation
Gold, gold ETFs, gold mutual funds	Slab rate	12.5% (gold ETFs after 12 months, physical gold after 24 months)
Debt mutual funds (bought from 1 April 2023)	Slab rate	Slab rate

Surcharge on these capital gains is capped at 15%, and 4% cess applies on top.

Residents selling property bought before 23 July 2024

Resident individuals and HUFs selling land or a building acquired before 23 July 2024 can pay whichever is lower:

12.5% without indexation, or
20% with indexation.

NRIs do not get this option.

Grandfathering for old equity

For listed shares and equity funds bought before 1 February 2018, the cost is the higher of the actual cost and the price on 31 January 2018 (capped at the sale price).

The ₹12 lakh rebate does not cover capital gains

The new regime’s rebate (section 156, formerly 87A) does not reduce tax on STCG on shares (20%) or LTCG above ₹1.25 lakh (12.5%). Someone with a ₹6 lakh salary and ₹3 lakh of STCG on shares will still pay tax on the gain.

Share buybacks: new rules from 1 April 2026

Before 1 April 2026: the full buyback amount was taxed as a deemed dividend at slab rates, and the cost of the shares became a capital loss.
From 1 April 2026 (Finance Act, 2026): buybacks are taxed as capital gains, on the buyback price minus your cost, at the normal STCG or LTCG rates.
Promoters face a higher effective rate under special provisions.

Saving tax on capital gains

Exemption (2025 Act)	Old section	Applies to
Section 82	54	LTCG from a residential house, reinvested in another house in India. Capped at ₹10 crore
Section 85	54EC	LTCG from land or building, invested in specified bonds within 6 months, up to ₹50 lakh
Section 86	54F	LTCG from any other asset (shares, plot, gold), with the net sale proceeds invested in a residential house

Other common strategies:

Harvest the ₹1.25 lakh LTCG exemption on equity each year: sell and buy back to reset your cost.
Set off losses (see below).
Time the sale so the asset becomes long-term.

Setting off and carrying forward losses

Short-term capital loss can be set off against both STCG and LTCG.
Long-term capital loss can be set off only against LTCG.
Unused losses can be carried forward for 8 years, but only if your return is filed by the due date.
Capital losses cannot be set off against salary or other income.
Crypto (VDA) losses cannot be set off at all.

Frequently asked questions

Is LTCG on equity up to ₹1.25 lakh tax-free?
Yes, the first ₹1.25 lakh of LTCG on listed equity and equity mutual funds is exempt each year. Gains above that are taxed at 12.5%.

How are SIP redemptions taxed?
Each SIP instalment is a separate purchase. Units are sold on a first-in, first-out basis, so some may be long-term and others short-term.

I sold my flat after 3 years. What is the tax?
It is a long-term gain. Residents who bought before 23 July 2024 can choose the lower of 12.5% (no indexation) and 20% (with indexation). You can reduce the tax by reinvesting under section 82 or 85.

Is gold jewellery taxed the same way?
Yes. Physical gold held for more than 24 months is taxed at 12.5% without indexation. If held for less, the gain is taxed at slab rates.

Sold shares, funds or property this year? Garvita Jain & Co. calculates capital gains, plans exemptions, reconciles broker statements and files the right return. Contact us here, or at contact@garvitajainandco.com or +91 98678 16597.

This article is general information based on the law as of October 2026 and is not professional advice.

Sources

Official

Professional / CA publications