Capital Gain Tax Ready Reckoner FY 2024-25 (AY 2025-26)
The Income Tax Department’s capital gains rules are a crucial aspect for ITR filers in AY 2025-26. Whether you are investing in stocks, selling property, redeeming gold ETFs, or selling unlisted shares, understanding the tax implications is essential.
What are Capital Gains?
Capital gain is the profit earned from the sale of a capital asset. The gain is classified into two types based on the holding period:
- Short-Term Capital Gain (STCG): When the asset is held for a shorter period and then sold.
- Long-Term Capital Gain (LTCG): When the asset is held beyond the specified period before selling.
Different assets have different holding period thresholds and tax rates. Here’s a complete breakdown of how capital gains are taxed for various assets.
1. Listed Equity Shares and Equity Mutual Funds
These are among the most common investments. Listed equity shares refer to those traded on a recognized stock exchange in India, while equity mutual funds invest 65% or more in equities.
| Type | Holding Period | Short-Term Capital Gains (STCG) | Long-Term Capital Gains (LTCG) |
|---|---|---|---|
| Listed Equity Shares / Equity Mutual Funds | STCG: ≤ 12 months LTCG: > 12 months | 15% (Section 111A) | 10% over ₹1 lakh (without indexation under Section 112A) |
Example:
Ravi buys 500 shares of Infosys at ₹1,000 each and sells them after 14 months at ₹1,300.
- Gain per share = ₹300
- Total gain = ₹1,50,000
- Exemption on LTCG = ₹1,00,000
- Taxable LTCG = ₹50,000 @ 10% = ₹5,000
2. Unlisted Equity Shares
Unlisted shares refer to those not traded on recognized stock exchanges in India. These are often held in private companies or startups.
| Type | Holding Period | STCG Tax | LTCG Tax |
|---|---|---|---|
| Unlisted Equity Shares | STCG: ≤ 24 months LTCG: > 24 months | Slab Rate (as per your income slab) | 20% with indexation |
Example:
Priya invests ₹5 lakh in a private company’s unlisted shares in 2020 and sells them in FY 2024-25 for ₹8 lakh.
- Indexed cost = ₹5 lakh × CII(2024-25)/CII(2020-21) = ₹5 lakh × 348/301 ≈ ₹5.78 lakh
- LTCG = ₹8 lakh – ₹5.78 lakh = ₹2.22 lakh
- Tax = 20% of ₹2.22 lakh = ₹44,400
Official Ready Reckoner FY 2024-25 link: Income Tax Capital Gains Ready Reckoner
Capital Gains on Gold Investments
Gold is one of the most preferred investment options in India, and capital gains arising from gold are taxable under the Income Tax Act. These gains may arise from physical gold (jewelry, coins, bars), gold ETFs, or Sovereign Gold Bonds (SGBs).
1. Tax Treatment of Physical Gold
- Short-Term Capital Gain (STCG): If gold is sold within 36 months of purchase, it is treated as a short-term capital asset, and gains are taxed as per the individual’s slab rate.
- Long-Term Capital Gain (LTCG): If gold is sold after 36 months, LTCG applies at 20% with indexation benefit.
2. Tax on Gold ETFs & Digital Gold
Same treatment as physical gold. The holding period and rates remain the same. Investors should maintain proper purchase records to avail of indexation benefits.
3. Sovereign Gold Bonds (SGBs)
- Interest Income: 2.5% per annum interest on SGBs is taxable under “Income from Other Sources.”
- Capital Gains: On maturity (after 8 years), the capital gain is tax-free. However, if sold in the secondary market before maturity:
- Before 3 years → STCG (as per slab)
- After 3 years → LTCG @ 20% with indexation
Example
Raj purchased gold coins worth ₹3 lakhs in July 2020 and sold them in August 2024 for ₹4.5 lakhs. Since the holding period exceeds 3 years, it’s a long-term capital asset. He gets indexation benefit on ₹3 lakhs and pays 20% tax on the adjusted gain.
Capital Gains on House Property
Real estate continues to be a major asset class in India. When individuals sell residential, commercial, or plot property, capital gain tax becomes applicable depending on the holding period.
1. Holding Period
- Short-Term: Sold within 24 months → STCG, taxed as per slab rate.
- Long-Term: Held > 24 months → LTCG @ 20% with indexation.
2. Deductions Under Section 54, 54EC & 54F
These provisions help reduce tax liability:
- Section 54: Applicable if sale proceeds of a residential property are reinvested into another residential property in India within 1 year before or 2 years after the sale (or construction within 3 years). Exemption up to ₹10 crores allowed as per Budget 2023 cap.
- Section 54EC: Investment in NHAI/REC bonds within 6 months of sale (up to ₹50 lakh) to claim exemption on LTCG.
- Section 54F: Applicable when the entire net consideration from sale of any asset (other than residential house) is reinvested into a residential house.
Example
Meena sold a residential flat held for 5 years and earned ₹50 lakh LTCG. She invested ₹40 lakh in a new flat and ₹10 lakh in 54EC bonds. Her entire LTCG is exempt.
Capital Loss Set-Off
- STCL can be set off against STCG or LTCG.
- LTCL can only be set off against LTCG.
- Unabsorbed capital loss can be carried forward for 8 years.
Capital Gains on Other Assets
Capital gains from sale of artworks, collectibles, cryptocurrency, rural agricultural land, and movable assets (car, furniture) vary based on their nature.
1. Crypto Assets
- Flat 30% tax on gains from Virtual Digital Assets (VDAs) like crypto and NFTs.
- No deduction (except cost of acquisition), no set-off of losses.
- 1% TDS on sale above ₹10,000 (₹50,000 for some users) under Section 194S.
2. Agricultural Land
- Rural: Not considered a capital asset → No capital gains tax.
- Urban: Treated as capital asset → Taxable as per holding period (STCG or LTCG).
3. Intangible Assets
Sale of patents, trademarks, and goodwill (if self-generated or purchased) also attracts capital gains tax as per their holding period.
4. Others
- Car, furniture: Personal-use items → Gains generally not taxed.
- Jewelry, paintings, antiques: Treated as capital assets → Taxed as STCG or LTCG.
Example
Ayan sold an NFT he purchased for ₹1 lakh and earned ₹3 lakh. Flat 30% tax applies on ₹2 lakh gain, plus 1% TDS at the time of transfer.
Capital Gains on House Property (Real Estate)
Real estate remains one of the most significant assets for long-term wealth creation in India. The capital gains tax treatment for house property depends on whether the asset is short-term or long-term:
Short-Term vs Long-Term Property
- Short-Term Capital Asset: Property sold within 2 years (24 months) of purchase.
- Long-Term Capital Asset: Property held for more than 2 years.
Tax Rate on Sale of Property
| Type | Period of Holding | Tax Rate | Indexation |
|---|---|---|---|
| Short-Term Capital Gain | Less than 24 months | Taxed as per slab rate | No |
| Long-Term Capital Gain | More than 24 months | 20% + surcharge + cess | Yes (Indexed Cost of Acquisition) |
Example: Selling a Flat
Suppose you purchased a flat in April 2018 for ₹50 lakhs and sold it in April 2024 for ₹90 lakhs. CII for 2018-19 is 280, and for 2024-25 it is 363.
- Indexed Cost: ₹50,00,000 × (363 / 280) = ₹64,82,143
- LTCG: ₹90,00,000 – ₹64,82,143 = ₹25,17,857
- Tax: 20% of ₹25,17,857 = ₹5,03,571 + cess
Capital Gains on Other Movable Assets
Capital gains on jewelry, art, antiques, or collectibles are considered under “other assets”. These are not eligible for exemption like equities.
| Asset | Long-Term Holding | LTCG Tax Rate |
|---|---|---|
| Jewelry | > 3 years | 20% with indexation |
| Paintings / Artworks | > 3 years | 20% with indexation |
| Vehicles | Capital gain not taxable if used personally (as per Income Tax Act) | Not Applicable |
Example: Selling Gold Jewelry
You bought gold jewelry worth ₹2,00,000 in FY 2019-20 and sold it for ₹3,50,000 in FY 2024-25. CII for 2019-20 is 289, and for 2024-25 is 363.
- Indexed Cost: ₹2,00,000 × (363 / 289) = ₹2,51,908
- LTCG: ₹3,50,000 – ₹2,51,908 = ₹98,092
- Tax: 20% = ₹19,618 + cess
Exemptions on Capital Gains under Income Tax Act
The following sections provide relief or exemption on capital gains when certain conditions are met:
- Section 54: Exemption on LTCG from sale of residential house if reinvested in another residential house (max 2 houses if LTCG is below ₹2 Cr).
- Section 54F: Exemption on LTCG from sale of any asset other than residential house if full net sale consideration is invested in a residential house.
- Section 54EC: Investment in NHAI/REC bonds within 6 months of sale up to ₹50 lakhs – 100% exemption for 5-year lock-in.
- Section 10(38): Withdrawn from FY 2018-19. Now LTCG on equity > ₹1 lakh is taxable @10%.
Important Notes:
- These exemptions must be claimed during ITR filing.
- Unutilized capital gains can be deposited in Capital Gains Account Scheme (CGAS) before return filing due date.
- Non-compliance may lead to withdrawal of exemptions.
Planning Tips for FY 2024-25
- Use losses from stocks or mutual funds to set off gains on gold or property.
- Plan transactions before March 31 to match your tax profile (short-term vs long-term).
- Prefer indexation benefits for LTCG wherever applicable.
- For high gains, diversify reinvestments (house + bonds).
- File ITR within the due date to claim all exemptions and avoid interest/penalties.
Important Official Resources
Conclusion
Capital gains tax impacts every investor — whether you’re selling shares, mutual funds, gold, real estate, or art. Understanding how gains are taxed under various asset classes helps in proactive planning and avoiding surprises at the time of ITR filing.
Make use of exemptions wisely, track your holding period, and always use the correct ITR form based on your capital gains. If needed, consult a tax expert for optimized savings and compliant disclosures for AY 2025-26.