What is Capital Gains Tax?#
Capital gains tax is levied on profit from sale of capital assets like property, stocks, mutual funds, and gold.
Types of Capital Gains#
Short-Term Capital Gains (STCG)#
- Asset held for less than 36 months (24 months for property)
- Taxed at normal slab rates
Long-Term Capital Gains (LTCG)#
- Asset held for more than 36 months (24 months for property)
- Taxed at 20% with indexation benefit
Tax Rates#
| Asset Type | STCG Rate | LTCG Rate |
|---|---|---|
| Equity Stocks | 15% | 10% |
| Mutual Funds | 15% | 10% |
| Property | Slab rate | 20% |
| Gold | Slab rate | 20% |
Exemptions Available#
- Section 54: Reinvestment in property
- Section 54EC: Investment in bonds
- Section 54F: Reinvestment in assets
Calculation Example#
Purchase price: Rs 50,00,000 Sale price: Rs 80,00,000 Gain: Rs 30,00,000
If property held for 3 years (LTCG): Indexed cost: Rs 50,00,000 × 1.2 = Rs 60,00,000 Taxable gain: Rs 80,00,000 - Rs 60,00,000 = Rs 20,00,000 Tax: 20% of Rs 20,00,000 = Rs 4,00,000