Tax · 8 min read
Capital gains tax on stocks and mutual funds in India (2026)
After the 2024 changes, equity is taxed at 20 percent short-term and 12.5 percent long-term above ₹1.25 lakh. Here is the full picture across stocks, funds and gold.
Krish Dalal
Founder and editor, PaisaExpert. Master's in Business Management, SP Jain School of Global Management, London. · Last updated 2026-05-30
Capital gains tax is the bill that arrives when you sell an investment for more than you paid. Most people only think about it at the moment of selling, which is exactly when it is too late to plan. A little awareness, mainly of the holding-period thresholds and the yearly exemption, can legitimately cut what you owe. This matters most for the equity in your SIP, which is where most Indians' capital gains will eventually come from.
Equity: stocks and equity mutual funds
Listed shares and equity-oriented mutual funds share the same rules, and they changed on 23 July 2024. The single most important line is the 12-month holding period, which separates the higher short-term rate from the lower long-term one.
| Holding period | Type | Tax rate |
|---|---|---|
| 12 months or less | Short-term (STCG) | 20 percent on the gain |
| More than 12 months | Long-term (LTCG) | 12.5 percent above ₹1.25 lakh of gains a year |
The ₹1.25 lakh exemption is the quiet gift here. Each financial year, the first ₹1.25 lakh of long-term equity gains is tax-free. Selling a slice of your long-held funds each year to use up that exemption, then if you wish buying back, resets your cost base higher and harvests tax-free gains. Done deliberately over many years, this 'tax harvesting' meaningfully lowers the eventual bill on a large portfolio.
Debt funds, gold and property
- Debt mutual funds bought after 1 April 2023 are taxed entirely at your slab rate, with no long-term benefit and no indexation, whatever the holding period. This removed the old advantage debt funds had over fixed deposits, so for the safe part of a portfolio, compare them with FDs and savings on after-tax terms.
- Gold (including gold ETFs and funds) held over two years is long-term, taxed at 12.5 percent. Physical gold and gold funds have their own nuances, so check the specific holding rules for what you hold.
- Property held over two years is long-term, taxed at 12.5 percent without indexation. Property bought before 23 July 2024 has a grandfathering option, letting you choose between 12.5 percent without indexation or the older 20 percent with indexation, whichever is lower.
Frequently asked
What to do next
- Before selling any equity, check whether you have crossed the 12-month line to qualify for the lower long-term rate.
- Each financial year, consider selling enough long-held equity to use up the ₹1.25 lakh tax-free exemption.
- Treat debt funds like FDs for tax now, and compare them on after-tax returns, not an old advantage.
- Run any planned sale through the capital gains calculator first, so the tax is known before you commit.