Capital Gains Tax on Shares & Mutual Funds: STCG vs LTCG Rates (2026)

When you sell shares, mutual funds or other assets at a profit, that gain is taxed as capital gains. How much you pay depends on how long you held the asset (short vs long term) and the asset type.

Listed shares & equity mutual funds

• Short-term (held ≤ 12 months) — STCG: Taxed at 20% (under Section 111A).
• Long-term (held > 12 months) — LTCG: Taxed at 12.5% on gains above ₹1.25 lakh per year (under Section 112A). Gains up to ₹1.25 lakh are exempt.

Debt mutual funds & other assets

Debt fund gains (bought after April 2023) are taxed at your slab rate regardless of holding period. Property and unlisted assets have their own holding periods and indexation rules.

How to save tax on capital gains

• Harvest the ₹1.25 lakh LTCG exemption each year by booking gains strategically.
• Set off losses — short-term losses offset both STCG and LTCG; carry forward unused losses for 8 years.
• Reinvest property gains under Sections 54/54F/54EC where eligible.

Reporting

Capital gains go in ITR-2 (or ITR-3 if you also have business income). See which ITR form to file.

FAQs

Is there still indexation on equity LTCG? No — equity LTCG uses the flat 12.5% without indexation.

Are intraday profits capital gains? No — intraday is treated as speculative business income.

File your capital gains with Taxwapsi — we auto-import your broker P&L and compute the tax.