Capital Gains Tax Calculator

Capital Gains Tax in India — Post-Budget 2024 Rules

The Union Budget 2024 rewired how capital gains are taxed in India. Finance Minister Nirmala Sitharaman simplified the rate structure but also removed indexation benefits from most asset classes — a change that hit debt mutual fund and property investors particularly hard.

Capital gains arise when you sell a capital asset — stocks, mutual funds, real estate, gold, bonds — for more than your purchase price. The tax treatment depends on two things: the asset class and how long you held it. Get the holding period wrong and you could end up paying tax at double the rate you expected.

LTCG vs STCG: The Holding Period Rules

Whether a gain qualifies as long-term or short-term depends entirely on holding period, and those thresholds differ by asset type. For listed equity shares and equity-oriented mutual funds, you need to hold for more than 12 months to qualify for LTCG treatment. For debt mutual funds and bonds, the threshold is 24 months. For unlisted shares and real estate, it's 24 months — and for gold, also 24 months.

Here's where investors often go wrong: the holding period clock starts on the day after purchase, and it ends on the date of sale. Transfer date matters, not settlement date, for most instruments.

The ₹1.25 Lakh LTCG Exemption on Equity

Budget 2024 raised the LTCG exemption on equity and equity-oriented mutual funds from ₹1 lakh to ₹1.25 lakh per financial year. This means your first ₹1,25,000 of long-term equity gains every year is completely tax-free. Only the surplus attracts the 12.5% flat rate.

This exemption is per taxpayer, per year — it doesn't carry forward. A married couple can each claim ₹1.25 lakh, effectively shielding ₹2.5 lakh of combined LTCG annually if both hold equity in their own names. Tax harvesting — deliberately booking gains up to the exemption limit each year and rebuying — remains a legitimate strategy to reduce future tax liability.

The Grandfathering Clause for Pre-2018 Holdings

When LTCG tax on equity was reintroduced in Budget 2018, the government protected gains accrued before 31 January 2018. This grandfathering clause says: for equity held before that date, your cost of acquisition is deemed to be the higher of your actual purchase price or the Fair Market Value (FMV) as on 31 January 2018.

In practice, this means gains built up before February 2018 are not taxed — only appreciation after that date counts. If you bought Infosys at ₹600 and it was trading at ₹1,100 on 31 January 2018, your deemed cost is ₹1,100 regardless of what you paid. You only pay LTCG on gains above ₹1,100.

This clause applies only to equity and equity-oriented funds. It has no relevance for debt funds, gold, real estate, or other assets.

Worked Examples

Indexation: What Changed in Budget 2024

Before Budget 2024, real estate and gold sellers could inflate their purchase price using the Cost Inflation Index (CII) to account for inflation, then pay 20% LTCG on the lower indexed gain. Budget 2024 removed indexation for all asset classes except certain property transactions — and even for property, sellers now choose between 12.5% without indexation or 20% with indexation for assets purchased before 23 July 2024.

For equity, indexation was never available. For debt mutual funds purchased after 31 March 2023, there's no LTCG category at all — every rupee of gain is taxed at your income slab rate, regardless of holding period. This single change made debt funds significantly less tax-efficient than they were before April 2023.

If you hold older debt funds purchased before 1 April 2023, those still get the old treatment — but most investors have already rolled those out by now.