How can I save tax on capital gains?

Multiple options: (1) Invest LTCG from property in another residential property (Section 54), (2) Invest in capital gains bonds (Section 54EC), (3) Hold equity for long term to get ₹1 lakh exemption annually, (4) Use indexation benefit for property LTCG, (5) Set off capital losses against capital gains.

What is indexation benefit in capital gains?

Indexation adjusts the purchase price of an asset for inflation using the Cost Inflation Index (CII) published by the government. This reduces taxable capital gains. Formula: Indexed cost = Actual cost × (CII of sale year / CII of purchase year). Available only for LTCG on property, debt funds, gold, and unlisted shares.

Tax Calculator

Capital Gains Tax Calculator

Q: What is the difference between STCG and LTCG?

Short-Term Capital Gains (STCG) apply when you sell assets held for less than specified period: 12 months for equity/equity MF, 24 months for immovable property, 36 months for other assets. Long-Term Capital Gains (LTCG) apply beyond these periods. Tax rates differ: STCG on equity is 15%, LTCG on equity above ₹1 lakh is 10%. For property, STCG is taxed at slab rate, LTCG at 20% with indexation benefit.

Calculate tax on equity, mutual funds, and property sales for FY 2025-26

Transaction Details

Asset Type

Purchase Price (₹) *

Sale Price (₹) *

Holding Period (months) *

Capital Gains Tax Guide (2026)

Equity & Mutual Funds

• LTCG: 12.5% (holding 12+ months)
• STCG: 20% (holding under 12 months)
• ₹1.25L exemption on LTCG
• Securities Transaction Tax applicable

Property/Real Estate

• LTCG: 12.5% without indexation
• STCG: 20% or slab rate
• Holding 24+ months for LTCG
• Exemption under Sec 54/54F available

Key Changes 2026

• Uniform 12.5% LTCG rate across all assets
• Indexation benefit removed
• LTCG exemption increased to ₹1.25L
• STCG at flat 20% for all

Frequently Asked Questions

What is the difference between STCG and LTCG?

Short-Term Capital Gain (STCG) arises from selling assets held for less than specified holding period. Long-Term Capital Gain (LTCG) arises from assets held longer. Holding period: Equity/Equity MF - 12 months, Debt MF/Bonds - 24 months, Real Estate - 24 months. LTCG gets preferential tax rates (lower tax); STCG is taxed higher.

What are the capital gains tax rates for FY 2025-26?

Equity: STCG @15%, LTCG @12.5% (exemption removed). Debt/other assets: STCG at slab rates, LTCG @20% with indexation benefit (or 12.5% without indexation). Real estate: LTCG @20% with indexation. Listed bonds: Same as equity. Unlisted shares: LTCG @20%. Rates updated as per latest budget provisions.

What is indexation and how does it reduce tax?

Indexation adjusts the purchase price of an asset for inflation using Cost Inflation Index (CII) published annually by government. Higher indexed cost means lower taxable gains. Available for debt mutual funds and real estate held long-term. Formula: Indexed Cost = Purchase Price × (CII of sale year / CII of purchase year).

Can I set off capital losses against capital gains?

Yes. STCG loss can offset both STCG and LTCG. LTCG loss can only offset LTCG, not STCG. If losses exceed gains, carry forward for 8 years (must file ITR on time). Example: Equity STCG loss ₹1L can offset Equity LTCG of ₹1L, making both tax-free.

Do I need to pay tax on equity mutual fund gains?

Yes. From FY 2024-25 onwards, equity mutual funds: STCG (holding < 12 months) taxed @15%, LTCG (holding ≥ 12 months) taxed @12.5% without any exemption. Previously, LTCG up to ₹1L was exempt, but this exemption has been removed as per the latest tax regime.

How is capital gain calculated on inherited property?

For inherited property, purchase price is taken as the price at which previous owner (from whom inherited) acquired it, not the market value at time of inheritance. Holding period includes previous owner's holding. If property acquired before April 1, 2001, Fair Market Value as on 01/04/2001 can be used as cost.

How to Use This Calculator

1
Select asset type: Equity/Equity Mutual Funds, Debt Mutual Funds, Real Estate, Gold, Bonds, or Unlisted Shares.
2
Choose transaction type: STCG (Short-Term) or LTCG (Long-Term) based on your holding period for the asset.
3
Enter purchase price, sale price, and any expenses incurred (brokerage, registration, improvement costs). These reduce taxable gains.
4
For LTCG on debt/real estate, enter Cost Inflation Index (CII) for purchase and sale years to calculate indexed cost and see your tax liability.

Key Terms & Definitions

Capital Asset: Any property held by you, including land, building, house, vehicles, patents, trademarks, shares, mutual funds, jewelry, etc. Gains from sale are taxable.
STCG (Short-Term Capital Gain): Gain from selling assets held for short period: Equity < 12 months, Debt/Real Estate < 24 months. Taxed higher than LTCG.
LTCG (Long-Term Capital Gain): Gain from assets held long-term: Equity ≥ 12 months, Debt/Real Estate ≥ 24 months. Gets preferential lower tax rates.
Indexation: Adjustment of asset's purchase price for inflation using Cost Inflation Index (CII). Reduces taxable gains on debt funds and real estate.
Cost Inflation Index (CII): Index published annually by government to measure inflation. Used to calculate indexed cost of acquisition for LTCG computation.
Exemption under Section 54: Exemption from LTCG tax on residential property if proceeds reinvested in another residential property within specified time. Conditions apply.

Formulas & Calculations

Capital Gain Calculation

Capital Gain = Sale Price - (Purchase Price + Transfer Expenses + Improvement Cost)

Transfer expenses include brokerage, registration, legal fees. Improvement cost is major additions/renovations (not repairs). Example: Sell at ₹50L, bought at ₹30L, expenses ₹2L → Gain = ₹50L - ₹32L = ₹18L.

Indexed Cost of Acquisition (for LTCG with Indexation)

Indexed Cost = Purchase Price × (CII of Sale Year / CII of Purchase Year) Indexed Gain = Sale Price - Indexed Cost - Expenses

Example: Debt MF bought in 2020 (CII 301) for ₹10L, sold in 2026 (CII 363) for ₹15L. Indexed Cost = ₹10L × (363/301) = ₹12.06L. Gain = ₹15L - ₹12.06L = ₹2.94L. Tax @20% = ₹58.8K.

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