Capital gains rates at a glance
Rates below apply to transfers on or after 23 July 2024, for resident individuals.
| Asset | Long-term if held | Long-term rate | Short-term rate |
|---|---|---|---|
| Listed equity shares, equity mutual funds (STT paid) | More than 12 months | 12.5% on gains above ₹1.25 lakh a year | 20% |
| Land and building | More than 24 months | 12.5% without indexation* | Slab rate |
| Unlisted shares, gold, other assets | More than 24 months | 12.5% without indexation | Slab rate |
| Debt mutual funds bought from 1 April 2023 | Always short-term | – | Slab rate |
*For land or building bought before 23 July 2024, resident individuals and HUFs can pay the lower of 12.5% without indexation and 20% with indexation. Buyback proceeds are taxed as capital gains from 1 April 2026.
Selling a property: what to get right
- Cost: purchase price, stamp duty and registration, brokerage and the cost of improvements with bills. For property acquired before 1 April 2001, fair market value on that date can be used.
- Stamp duty value: if the ready reckoner value exceeds the sale price by more than 10%, the stamp duty value is taken as the sale price.
- TDS: the buyer deducts 1% TDS on property of ₹50 lakh or more from a resident seller; for NRI sellers the rules are different (see NRI taxation). Check with the TDS on property calculator.
Saving tax legally: sections 54, 54F and 54EC
| Section | Gain from | Invest in | Time limit |
|---|---|---|---|
| 54 | Residential house | One residential house in India (two houses once in a lifetime if gain up to ₹2 crore) | Buy 1 year before or 2 years after; construct within 3 years |
| 54F | Any long-term asset other than a house | One residential house; the net sale proceeds must be invested for full exemption | Same as section 54 |
| 54EC | Land or building | Specified bonds, up to ₹50 lakh, locked in for 5 years | Within 6 months of sale |
Exemption under sections 54 and 54F is capped at ₹10 crore. If the new house is not bought before the return due date, the unused amount must be deposited in the Capital Gains Account Scheme to keep the exemption. Model the options with the section 54/54F/54EC calculator.
Shares and mutual funds
- Use the broker’s capital gains statement, but check grandfathering for shares bought before 1 February 2018 and corporate actions such as bonus and splits.
- Harvest the ₹1.25 lakh long-term exemption each year where it makes sense.
- Set off: short-term losses can be set off against both short and long-term gains; long-term losses only against long-term gains. Unabsorbed losses carry forward for 8 years if the return is filed on time.
Documents usually needed
- Purchase and sale deeds, allotment letters, stamp duty and registration receipts.
- Improvement bills and loan statements.
- Broker and mutual fund capital gains statements.
- Proof of reinvestment: new property agreement, 54EC bond certificates or CGAS deposit.
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