Capital gains tax is where most investors leak the most money. The July 2024 Budget overhauled several rules, and a lot of advice on the internet is now outdated. This chapter is the current state of play.

The current rates at a glance (FY 2025-26)

Asset	STCG holding	STCG rate	LTCG holding	LTCG rate
Listed equity / equity MF	≤ 12 months	20%	> 12 months	12.5% above ₹1.25 lakh
Debt MF (post-Apr 2023 units)	N/A	Slab	N/A	Slab
Gold ETF / physical	≤ 24 months	Slab	> 24 months	12.5% no indexation
Real estate (post-Jul-2024)	≤ 24 months	Slab	> 24 months	12.5% no indexation
Unlisted shares	≤ 24 months	Slab	> 24 months	12.5%
Sovereign Gold Bond (held to maturity)	N/A	N/A	N/A	Exempt

What changed in July 2024

• Equity LTCG: 10% → 12.5%, exemption ₹1 lakh → ₹1.25 lakh
• Equity STCG: 15% → 20%
• Real estate LTCG: 20% with indexation → 12.5% without indexation (with grandfathering choice for properties acquired pre-23-Jul-2024)
• Listed bonds, debt funds, and most non-equity assets: indexation removed across the board
• Holding period definitions standardised — listed securities 12m, everything else 24m

Equity LTCG — the ₹1.25 lakh exemption is per-year, per-PAN

This is one of the most valuable annual allowances in the Indian tax code, and one of the most underused. Every financial year, the first ₹1.25 lakh of equity LTCG (across all sales combined) is tax-free.

LTCG harvesting — the basic technique

Suppose you hold equity MF units bought 18 months ago, now worth ₹15 lakh with ₹3 lakh unrealised LTCG. Each March:

1. Sell enough units to realise ₹1.25 lakh of LTCG (tax-free).
2. Buy back the same units the next day at the new (higher) NAV.
3. Your cost basis is reset higher. The next time you sell, your taxable gain is lower.

Done annually for 20 years, this can save several lakhs in cumulative tax. The LTCG ledger tool tracks your annual exemption usage automatically.

Tax-loss harvesting (TLH)

If you have unrealised losses, sell to realise them and offset against your gains:

• STCL can offset STCG and LTCG (any category)
• LTCL can offset only LTCG
• Unabsorbed losses carry forward for 8 assessment years
• Loss must be reported in ITR of the loss year for carry-forward (even if income is below taxable limit)

Wash-sale rules: Indian tax law does not have a US-style 30-day wash-sale rule. You can sell and buy back the same security on the same day to crystallise a loss. The price risk overnight is a separate question.

Set-off rules summary

Loss type	Can offset in same year	Carry forward
STCL	STCG + LTCG	8 years (against STCG / LTCG only)
LTCL	LTCG only	8 years (against LTCG only)
Business loss (non-speculative)	Any income except salary	8 years (against business income only)
Speculative business loss	Speculative income only	4 years
House property loss	Other heads up to ₹2 lakh	8 years (against house property only)

Section 54 / 54F / 54EC — real estate LTCG exemptions

• Section 54: Sell a residential house, reinvest gain in another residential house within timelines — gain exempt.
• Section 54F: Sell any LTCA (other than house), reinvest entire net consideration in residential house — gain exempt proportionally.
• Section 54EC: Invest LTCG (capped at ₹50 lakh per year) in NHAI / REC bonds within 6 months — 5-year lock-in, 5.25% taxable interest.

Next chapter: actually filing your return.