What is Capital Gains Tax? — Meaning, Definition & Example
Definition
Capital Gains Tax is levied on profit from selling capital assets like stocks, mutual funds, property, or gold. Short-Term Capital Gains (STCG) applies for shorter holding periods, while Long-Term Capital Gains (LTCG) applies for longer holding periods with generally lower rates.
Selling equity shares held for 18 months with ₹2 lakh profit: LTCG of ₹75,000 taxed at 12.5% (after ₹1.25L exemption) = ₹9,375 tax.
🇮🇳 Capital Gains Tax in Hindi / हिंदी में
कैपिटल गेन्स टैक्स — कैपिटल गेन्स टैक्स शेयर, म्यूचुअल फंड, प्रॉपर्टी या सोने जैसी पूंजीगत संपत्ति बेचने से हुए लाभ पर लगाया जाता है। STCG कम होल्डिंग अवधि पर और LTCG लंबी अवधि पर लागू होता है।
Capital Gains Tax (Hinglish) — Capital Gains Tax wo tax hai jo stocks, mutual funds, property ya gold jaise assets bechne pe profit pe lagta hai. STCG chhoti holding pe aur LTCG lambi holding pe lagta hai.
The Current Rates (Post-Budget-2024 — Still in Force FY 2026-27)
| Asset | Short-Term (rate) | Long-Term (holding / rate) |
|---|---|---|
| Listed stocks & equity mutual funds | 20% (held <12 months) | 12+ months: 12.5% on gains above ₹1.25 lakh/year |
| Property (land/house) | Slab rate (<24 months) | 24+ months: 12.5% without indexation* |
| Debt mutual funds (bought after 1 Apr 2023) | Slab rate | Slab rate — no LTCG benefit at all |
| Physical gold / jewellery | Slab rate (<24 months) | 24+ months: 12.5% |
| Gold ETFs / gold funds (listed) | Slab rate (<12 months) | 12+ months: 12.5% |
*Property grandfathering: for property bought before 23 July 2024, resident individuals may choose the better of 12.5% without indexation OR 20% with indexation — compute both before selling.
The ₹1.25 Lakh Free Allowance (Use It Every Year)
Equity LTCG up to ₹1.25 lakh per financial year is tax-free. Smart investors "harvest" it: sell winners up to ₹1.25L of gains in March, buy them back — the repurchase resets your cost upward, and the allowance renews next year. Left unused, it lapses; over a decade that's ₹12.5L+ of gains you could have moved tax-free.
Set-Off Rules — Where Losses Become Useful
Short-term losses can offset both short- AND long-term gains. Long-term losses offset only long-term gains. Unadjusted losses carry forward 8 years — but ONLY if you file your ITR by the due date. A missed deadline burns the entire loss bank.
The Big Exemptions When You Sell Property
Section 54: sell a house, buy another within 2 years (or build in 3) — LTCG exempt to the extent reinvested. Section 54F: sell ANY long-term asset, put the proceeds into a house. Section 54EC: park up to ₹50 lakh of property gains in REC/NHAI bonds within 6 months (5-year lock, ~5.25% taxable interest). Money not deployed by ITR date goes into the Capital Gains Account Scheme to keep the claim alive.
Rules verified as of July 2026 (post-Budget-2024 capital-gains framework; Budget 2026 made no changes). Facts last checked: 11 July 2026 by Priyanka Dhawan.