Question 1

What are capital gains?

Accepted Answer

Capital gains are the profit you earn when you sell a capital asset (stocks, mutual funds, property, gold, etc.) for more than you paid for it. If the sale price is lower than the purchase price, it results in a capital loss.

Question 2

What is the difference between LTCG and STCG?

Accepted Answer

Long-Term Capital Gains (LTCG) apply when you hold an asset beyond a specified period — for example, 12 months for listed equity and equity mutual funds, 24 months for property and gold. Short-Term Capital Gains (STCG) apply when you sell before completing the minimum holding period. LTCG is generally taxed at a lower rate than STCG.

Question 3

What changed in Budget 2024 for capital gains?

Accepted Answer

Budget 2024 introduced several key changes: LTCG tax on listed equity and equity MFs was increased from 10% to 12.5%. STCG on these assets was increased from 15% to 20%. The LTCG exemption limit was raised from ₹1 lakh to ₹1.25 lakh per year. Indexation benefit was removed for property sales on or after July 23, 2024, with LTCG on property now taxed at 12.5% without indexation.

Question 4

What is grandfathering in capital gains?

Accepted Answer

Grandfathering is a provision that protects gains made before a certain date from being taxed under new rules. For listed equity and equity mutual funds, gains made up to January 31, 2018 are grandfathered — meaning the cost of acquisition is considered to be the higher of actual purchase price or the Fair Market Value (FMV) on January 31, 2018, thus exempting pre-2018 gains.

Question 5

What is indexation and how does it work?

Accepted Answer

Indexation adjusts the purchase price of an asset for inflation using the Cost Inflation Index (CII) published by the government. This increases your cost base, thereby reducing the taxable capital gain. Post Budget 2024, indexation benefit has been removed for property sold on or after July 23, 2024. For debt mutual funds and other assets sold before that date, indexation may still apply depending on the holding period and purchase date.

Question 6

What is the LTCG exemption on equity?

Accepted Answer

For listed equity shares and equity-oriented mutual funds, LTCG up to ₹1.25 lakh per financial year is exempt from tax (raised from ₹1 lakh in Budget 2024). Any LTCG above this threshold is taxed at 12.5% plus applicable cess. This exemption applies only to assets on which Securities Transaction Tax (STT) has been paid.

Item	Value
Asset Type	Listed Equity Shares
Holding Period	60 months (threshold: 12 months)
Gain Type	Long-Term (LTCG)
Capital Gain / Loss	₹3,00,000
Exemption (Sec 112A)	₹1,25,000
Applicable Tax Rate	12.5%
Taxable Gain	₹1,75,000
Tax Amount	₹21,875
Health & Education Cess (4%)	₹875
Total Tax Payable	₹22,750

Capital Gains Tax Calculator

Cost vs Gain Breakdown

Detailed Breakdown

Frequently Asked Questions