Capital Gains Tax Basics for India (AY 2026-27)
Major changes in capital gains tax from FY 2024-25 continue to matter for AY 2026-27. Use this guide as a practical overview and verify the final rule before filing.
What this guide covers
- How India tax law separates short-term and long-term capital gains
- How holding periods and rates differ by asset class
- Where exemptions such as Sections 54, 54F, and 54EC fit into planning
- Why dates, FY, and AY matter before using a gain estimate in a return
What Changed in Budget 2024?
New Tax Rates (AY 2026-27)
Understanding STCG vs LTCG
LTCG Exemption on Equity
- Exemption Amount: ₹1,25,000 per financial year
- Applicable To: Listed equity shares and equity-oriented MF (65%+ equity)
- Calculation: Only LTCG above ₹1.25L is taxed at 12.5%
- STT Required: Securities Transaction Tax must have been paid
Capital Gains Exemptions
Loss Set-off Rules
Grandfathering for Equity (Pre-2018)
For shares/MF purchased before 31-Jan-2018:
Practical example
An investor sells listed equity after the relevant long-term holding period and earns a gain. The working starts by identifying sale value, acquisition cost, and any eligible adjustments, then compares the resulting gain with the annual exemption threshold before applying the long-term rate.
For property, the working is broader: sale value, purchase cost, improvement cost, transfer expenses, and possible Sections 54 or 54EC claims can all change the final taxable gain.
Common mistakes
- Using the wrong holding period for the asset being sold
- Applying an outdated rate or indexation rule to the wrong year
- Claiming an exemption without checking the reinvestment timeline
- Skipping transfer expenses or improvement-cost records that could change the taxable gain
- Relying only on a calculator instead of the final transaction documents
Frequently Asked Questions
The difference comes from the holding period for the asset. Once the asset crosses the relevant long-term threshold, the gain is usually taxed under the long-term rules instead of the short-term rules.
Yes. Capital gains tax treatment can change through Finance Acts, notifications, or clarifications. Always match your transaction to the correct FY and AY before relying on a calculation.
They can, but only if you satisfy the legal conditions, timelines, and investment rules for the relevant exemption. The exemption amount is not automatic.
No. A calculator is useful for planning, but final filing depends on transaction records, dates, broker or registry documents, and the exact law applicable to the year.