What is Capital Gains Tax in India 2025?
Capital gains tax is a tax levied on profits earned from selling capital assets such as equity shares, mutual funds, real estate property, debt funds, gold, and other investments. The tax rate depends on the holding period (short-term vs long-term) and the type of asset sold. This free capital gains tax calculator helps you calculate STCG (Short-Term Capital Gains) and LTCG (Long-Term Capital Gains) tax liability instantly based on purchase price, sale price, and holding period.
How to Calculate Capital Gains Tax?
To calculate capital gains tax, follow these steps:
- Determine Purchase Price: The original cost of acquiring the asset
- Determine Sale Price: The amount received from selling the asset
- Calculate Capital Gain: Sale Price - Purchase Price (with indexation if applicable)
- Check Holding Period: Classify as short-term or long-term based on asset type
- Apply Tax Rate: Use the applicable STCG or LTCG tax rate
- Calculate Final Tax: Taxable Gain × Tax Rate = Capital Gains Tax
Understanding Short-Term vs Long-Term Capital Gains
The classification of capital gains as short-term or long-term depends on the holding period:
- Equity Shares & Equity Mutual Funds: Held for more than 12 months = Long-term, Less than 12 months = Short-term
- Debt Mutual Funds: Held for more than 36 months = Long-term (for units purchased before April 1, 2023), All debt fund gains now taxed at slab rates
- Property/Real Estate: Held for more than 24 months = Long-term, Less than 24 months = Short-term
- Gold, Unlisted Shares, Land: Held for more than 24 months = Long-term
Capital Gains Tax Rates by Asset Type (FY 2024-25)
| Asset | STCG (Short-term) | LTCG (Long-term) |
|---|---|---|
| Equity Shares/Equity MF | 15% (if <12 months) | 10% above ₹1L |
| Debt Funds | Slab rate | Slab rate (no indexation) |
| Property | Slab rate (if <24 months) | 20% with indexation |
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Tax Saving Tip
For equity, harvest losses to offset gains. For property, reinvest in another property (Sec 54) or bonds (Sec 54EC) to save LTCG tax.
How to Save Capital Gains Tax in India - Legal Tax Saving Methods
- Hold Investments Long-term: LTCG tax rates are significantly lower than STCG. For equity, hold for at least 12 months; for property, hold for 24+ months.
- Tax-loss Harvesting Strategy: Offset capital gains with capital losses from other investments in the same financial year to reduce overall tax liability.
- Utilize ₹1 Lakh Annual Exemption: Equity LTCG up to ₹1 lakh per financial year is tax-free. Plan your sales accordingly.
- Section 54 - Reinvest in Residential Property: Exemption available if you reinvest LTCG from property sale into another residential property within specified time limits.
- Section 54EC - Capital Gains Bonds: Invest up to ₹50 lakhs in REC/NHAI bonds within 6 months of property sale to claim LTCG exemption.
- Section 54F - Buy Residential Property: If you sell any asset (except residential property), invest gains in residential property to claim exemption.
- Indexation Benefit: For property and certain assets, use Cost Inflation Index (CII) to adjust purchase price for inflation, reducing taxable gains.
- Gift to Family Members: Gifts to specified relatives are tax-free. Consider strategic gifting before asset sale (consult tax advisor).
Capital Gains Tax Exemptions and Deductions
Several exemptions are available under the Income Tax Act to reduce or eliminate capital gains tax liability:
- Section 54: Exemption on sale of residential property if proceeds reinvested in another residential house
- Section 54EC: Exemption on LTCG by investing in specified bonds (REC, NHAI, PFC) up to ₹50 lakh
- Section 54F: Exemption on sale of any long-term asset (except house property) if invested in residential property
- Section 112A: ₹1 lakh exemption on equity LTCG per year
- Section 10(38): (Replaced by 112A) - Historical exemption on equity LTCG
Who Should Use This Capital Gains Tax Calculator?
- Stock Market Investors: Calculate tax on equity share sales and intraday trading profits
- Mutual Fund Investors: Determine tax liability on SIP withdrawals and lump sum redemptions
- Property Sellers: Estimate capital gains tax on real estate transactions with indexation
- Crypto Traders: Calculate tax on cryptocurrency and digital asset sales
- Financial Planners: Help clients with tax planning and investment exit strategies
- Taxpayers: Prepare for advance tax payments and ITR filing
Frequently Made Mistakes in Capital Gains Calculation
- Not applying indexation benefit for property and debt funds (where applicable)
- Forgetting to account for ₹1 lakh annual exemption on equity LTCG
- Mixing up holding period criteria for different asset types
- Not considering brokerage and transaction costs in cost of acquisition
- Missing deadlines for reinvestment under Section 54/54EC for exemptions
- Not reporting even if gains are below exemption limit