Question 1

How is capital gains tax calculated on stocks in India?

Accepted Answer

For listed equity shares and equity mutual funds held for more than 12 months, gains above ₹1.25 lakh per year are taxed as LTCG at 12.5% (Budget 2024 rate). If held for 12 months or less, gains are taxed as STCG at 20%. Securities Transaction Tax (STT) must have been paid at the time of sale. A 4% Health & Education Cess is added to the tax amount.

Question 2

What is the difference between LTCG and STCG?

Accepted Answer

LTCG (Long-Term Capital Gains) applies to assets held beyond a specified period: 12 months for equity, 24 months for property and gold, and 36 months for debt instruments. STCG (Short-Term Capital Gains) applies to assets sold before these thresholds. LTCG typically attracts lower tax rates, incentivising longer holding periods.

Question 3

What is the ₹1.25 lakh LTCG exemption on equity?

Accepted Answer

From Budget 2024, long-term capital gains on listed equity shares and equity-oriented mutual funds enjoy an annual exemption of ₹1.25 lakh per financial year. Only gains exceeding this threshold are taxed at 12.5%. This exemption applies per taxpayer, not per transaction — so aggregate LTCG from all equity sales in a year up to ₹1.25 lakh is tax-free.

Question 4

How is capital gains tax calculated on property?

Accepted Answer

For property held more than 24 months, LTCG is taxed at 12.5% on the difference between sale price and purchase price (indexation benefit has been removed from Budget 2024). STCG on property sold within 24 months is taxed at your income tax slab rate. You can claim exemption under Section 54 (reinvest in residential property) or Section 54EC (invest in specified bonds within 6 months).

Question 5

Can capital losses be set off against gains?

Accepted Answer

Yes. Short-term capital losses can be set off against both STCG and LTCG from any asset type. Long-term capital losses can only be set off against LTCG. Unabsorbed losses can be carried forward for up to 8 assessment years. You must file your ITR by the due date to carry forward capital losses.

Question 6

How is capital gains on debt mutual funds taxed after 2023?

Accepted Answer

From April 2023, gains on debt mutual funds (held for any period) are taxed at your income tax slab rate — there is no separate LTCG benefit or indexation. This change makes debt fund taxation similar to bank fixed deposits. Units purchased before April 1, 2023, may still get grandfathered LTCG treatment for the portion of gains accrued until March 31, 2023.

Question 7

What are the exemptions available under Section 54 and 54EC?

Accepted Answer

Section 54 exempts LTCG on a residential property if you reinvest the gain in another residential property within 2 years (purchase) or 3 years (construction). Section 54EC exempts up to ₹50 lakh of LTCG if invested in specified bonds (NHAI, REC) within 6 months of sale, with a 5-year lock-in. Section 54F provides exemption on LTCG from non-property assets reinvested in a residential property.

Capital Gains Tax Calculator India — LTCG & STCG