Capital Gains Tax Post-Budget 2024: What Actually Changed for Investors

Capital gains tax in India was rewritten in a single afternoon on 23 July 2024, when the Finance Minister presented Budget 2024 and announced changes that took effect from that very day. Twenty-one months later, most of the dust has settled — Budget 2025 made no further changes, Budget 2026 made no further changes, and the rules are now stable enough that we can stop calling them "new" and start treating them as the operating reality.

What I want to do here is walk through what actually changed, what the changes mean for different kinds of investors in practice, and where the surprises are buried. The headline that the indexation benefit was abolished is true but incomplete. The holding-period changes are the ones that quietly reshaped tax planning. And the equity STCG hike — the change with the least coverage — is the one that hit short-term traders hardest. Use Ganak''s Capital Gains Calculator to model your own holdings as you read.

23 July 2024: The Pivot Date That Matters

Every capital gains rule change introduced by Budget 2024 attaches to one specific date: 23 July 2024, the day the Finance (No. 2) Bill was presented. Transactions completed on or after that date follow the new rules; transactions completed before that date follow the old rules. For most assets the question is academic — anything sold in FY 2025-26 or FY 2026-27 will be governed by the new rules regardless. But for property, the date determines whether you have the dual-rate option or not.

The four substantive changes from that day:

1. LTCG rates harmonised at 12.5% across most asset classes, replacing the earlier mosaic of 10%, 20% with indexation, and slab rates depending on what you held.
2. Indexation removed for property and other long-term assets, with a transitional choice preserved only for property bought before the pivot date.
3. Holding periods consolidated to two clean numbers: 12 months for listed equity and equity mutual funds, 24 months for everything else.
4. Equity STCG raised from 15% to 20% under Section 111A, and equity LTCG raised from 10% to 12.5% under Section 112A, with the annual exemption threshold simultaneously raised from ₹1 lakh to ₹1.25 lakh.

The Income Tax Act, 2025 — which replaced the 1961 Act on 1 April 2026 — kept all of these provisions intact. The section numbers changed structurally (capital gains is still organised broadly under what was Section 45 onward, now reorganised within the new Act), but the substantive rules are unchanged. For your tax return, this means the rates and rules you''re reading about here apply for both Tax Year 2025-26 and Tax Year 2026-27.

LTCG and STCG Rates: The Reference Table

The table below covers every common asset class and the rates that apply to transactions completed in FY 2026-27. Print it if you find it useful; this is the table I keep open in a tab when filing.

* The dual-rate choice for pre-23 July 2024 property is available only to resident individuals and HUFs. Companies, firms, and non-residents got 12.5% flat.

Property: The Dual-Rate Option Most People Get Wrong

This is the section where most readers come for actual decision support, so I''ll spend time on it. If you bought property before 23 July 2024 and you''re selling now or in the near future, you have a choice between two computation methods. Picking the wrong one costs real money.

Option 1: 12.5% without indexation. Compute the gain as sale price minus original cost (plus improvement expenses and brokerage). Apply 12.5% tax. Simple, no inflation adjustment.

Option 2: 20% with indexation. Compute the indexed cost using the Cost Inflation Index, which inflates your purchase price for inflation. Subtract the indexed cost from the sale price. Apply 20% tax to the smaller resulting gain.

Which option wins depends almost entirely on how long you held the property and how much inflation accumulated during that period. The CII for FY 2025-26 is 376 (CBDT Notification 70/2025); the index for the year of purchase determines how much your cost gets bumped up.

Worked example. Sunita bought a flat in Bengaluru in FY 2012-13 for ₹40 lakh. She sold it in FY 2025-26 for ₹90 lakh after spending ₹5 lakh on renovation. The CII for 2012-13 was 200; for 2025-26 it''s 376.

• Option 1 (12.5% no indexation): Gain = ₹90 lakh − ₹45 lakh = ₹45 lakh. Tax = 12.5% × ₹45 lakh = ₹5.625 lakh.
• Option 2 (20% with indexation): Indexed cost = ₹40 lakh × (376/200) = ₹75.2 lakh. Indexed renovation = ₹5 lakh × (relevant CII ratio). Indexed gain ≈ ₹9 lakh. Tax = 20% × ₹9 lakh = ₹1.8 lakh.

For a 13-year holding, indexation wins decisively — Sunita pays ₹3.8 lakh less by choosing Option 2. The general rule of thumb that has held up across hundreds of cases I''ve seen: if you bought your property more than seven or eight years ago, indexation almost always wins. If you bought it three to five years ago, the two options are close. If you bought it within the last two or three years, 12.5% flat is usually better.

Compare both options carefully every time. Most CAs do this automatically; if you''re self-filing, build out both calculations in a spreadsheet and pick the lower number. There is no penalty for choosing — the law explicitly allows you to elect whichever option produces less tax.

Equity: The Threshold Increase That Hides a Rate Hike

The equity capital gains changes are the ones small investors hear about most often, usually framed as "the exemption was raised from ₹1 lakh to ₹1.25 lakh." That''s true but partial.

The full picture: the LTCG rate on listed equity moved from 10% to 12.5%, the exemption rose from ₹1 lakh to ₹1.25 lakh, and the STCG rate moved from 15% to 20%. For most retail investors making modest gains within the exemption, none of this matters. For investors making ₹3-5 lakh of LTCG annually, the rate hike costs more than the exemption raise saves. For active traders generating significant STCG, the move from 15% to 20% is the change that actually hurt.

Worked example. Ravi sold listed equity shares in FY 2025-26 with ₹3,00,000 LTCG. Under the old regime, his tax would have been 10% × (₹3,00,000 − ₹1,00,000) = ₹20,000. Under the current regime, 12.5% × (₹3,00,000 − ₹1,25,000) = ₹21,875. About ₹2,000 more — a small absolute hit, but the direction is up.

Now Priyanka, who actively trades and generated ₹5,00,000 of STCG in FY 2025-26. Old regime: 15% × ₹5,00,000 = ₹75,000. Current regime: 20% × ₹5,00,000 = ₹1,00,000. ₹25,000 more, year on year, on the same activity. This is the change that genuinely changed trading economics — and yet it gets a fraction of the coverage that the LTCG threshold raise gets.

One detail worth knowing: the ₹1.25 lakh exemption applies only to LTCG under Section 112A — that is, listed equity, equity mutual funds, and business trust units where STT is paid. Property LTCG, gold LTCG, and unlisted equity LTCG don''t get the exemption. They pay 12.5% from rupee one (after subtracting any allowable deductions and exemptions under Sections 54, 54F, 54EC, etc.).

Debt Funds: The 2023 Change That Still Surprises People

This isn''t strictly a Budget 2024 change — it predates Budget 2024 — but it interacts with the new framework and continues to confuse investors filing their first tax return after holding debt funds for several years. From 1 April 2023, gains from debt mutual funds purchased on or after that date are always taxed at slab rates, regardless of holding period. There is no LTCG concession, no indexation, no 12.5% rate. Hold a debt fund for ten years, sell it, and the entire gain is taxed at your slab rate as if it were salary income.

For a taxpayer in the 30% slab, this means debt mutual fund returns are now genuinely worse than fixed deposits on a tax-adjusted basis (FDs were always slab-rate; debt funds used to enjoy 20% with indexation, which made them clearly superior). The rationale was tax parity between debt funds and FDs. The effect was to remove what had been the most popular tax-efficient debt instrument for the salaried middle class.

If you bought debt mutual funds before 1 April 2023, those holdings continue to enjoy the old treatment — 12.5% LTCG without indexation if held over 24 months, slab rate otherwise. The acquisition date determines treatment, not the redemption date. Keep a careful record of which folios were bought when.

Loss Set-Off Rules: One Asymmetry to Watch

Capital losses are only useful if you can set them off against capital gains. The rules here are unchanged but worth restating clearly.

Short-term capital losses (STCL) can be set off against either short-term or long-term capital gains. Long-term capital losses (LTCL) can only be set off against long-term capital gains — not against short-term gains. This asymmetry matters for tax planning around year-end. If you have unrealised LTCG and unrealised LTCL in your portfolio, harvesting the LTCL by selling and rebuying gives you a usable loss. If you have unrealised LTCL but only short-term gains, the loss is deferred to future years until LTCG materialises.

Unused capital losses can be carried forward for eight assessment years, but only if you file your ITR by the original due date (31 July for individuals). Miss the deadline, even by one day, and you forfeit the right to carry forward. This is one of the meanest provisions in the Act and the one I''ve seen catch the most taxpayers by surprise.

One transitional relief that was proposed and then removed: the draft Income Tax Bill 2025 had suggested allowing LTCL accumulated before March 31, 2026 to be set off against STCG from FY 2026-27 onwards. That provision was dropped from the final Income Tax Act 2025. The standard restriction stands: LTCL only sets off against LTCG.

Section 54, 54F, 54EC: Reinvestment Exemptions Survive

The reinvestment exemptions that let property sellers defer or eliminate capital gains tax weren''t touched by Budget 2024 and remain available.

Section 54: sell a residential property, buy another residential property within 1 year before or 2 years after the sale (or build within 3 years). The capital gain reinvested is exempt. Cap of ₹10 crore on the exempt amount, introduced from FY 2023-24.

Section 54F: sell any long-term asset other than a residential property, buy a residential property under the same time frame. Exempt proportionate to reinvestment. Same ₹10 crore cap.

Section 54EC: invest LTCG (up to ₹50 lakh per financial year) in NHAI or REC bonds within 6 months of sale. The bonds carry around 5.25% interest, lock-in is 5 years, and the gain reinvested is fully exempt.

The Capital Gains Account Scheme remains available for parking proceeds during the reinvestment window. Most banks offer it. If you''re likely to reinvest but haven''t finalised the new property, park the gains in a CGAS account before the ITR filing deadline of the year of sale. Otherwise the entire gain becomes taxable.

Frequently Asked Questions

Did Budget 2026 make any changes to capital gains tax?

No. Budget 2026 confirmed that the rates and rules introduced by Budget 2024 continue unchanged. LTCG remains 12.5% across most assets, STCG on equity remains 20%, and the property dual-rate option for pre-23 July 2024 acquisitions remains available. Budget 2025 also made no changes. The framework introduced in July 2024 is now stable enough that you can plan around it for the medium term.

Can I claim Section 87A rebate on my capital gains?

No. The ₹60,000 rebate under Section 87A in the new regime applies only to slab-rate income, not to capital gains taxed at special rates. So if your only income for the year is ₹6 lakh of LTCG on equity, you owe 12.5% on the amount above ₹1.25 lakh — the rebate doesn''t bring your tax to zero. This catches a lot of small investors who assumed the rebate covered everything up to the threshold.

Is the holding period for property still 36 months?

No. Budget 2024 reduced the LTCG holding period for property and most other assets from 36 months to 24 months. So a property held for 25 months and sold qualifies as long-term. Listed equity and equity mutual funds remain at 12 months. The holding period change is one of the most useful taxpayer-friendly provisions in the entire Budget 2024 package — it lets sellers crystallise long-term treatment a full year earlier than before.

How do I choose between 12.5% without indexation and 20% with indexation for property?

Compute both methods and pick the lower number. The choice is available only to resident individuals and HUFs, and only for property acquired before 23 July 2024. As a general rule: properties held more than 7-8 years almost always benefit from 20% with indexation; properties held 3-5 years are typically close; properties held less than 3 years usually do better at 12.5% flat. The Cost Inflation Index for FY 2025-26 is 376; you''ll need the CII for your purchase year too.

Are debt mutual funds still tax-efficient?

Not for purchases made on or after 1 April 2023. Those gains are taxed at slab rate regardless of holding period — no LTCG concession, no indexation. For investors in the 30% slab, this makes debt funds inferior to direct bond purchases on a tax-adjusted basis. Debt funds bought before 1 April 2023 retain the old treatment (LTCG at 12.5% without indexation, or slab rate STCG, depending on holding period). The acquisition date determines treatment.

Can I carry forward capital losses?

Yes, for up to eight assessment years, but only if you file your ITR by the original due date — 31 July for individuals. Miss the deadline and you lose the carry-forward right entirely. Long-term capital losses can only set off against long-term capital gains; short-term losses can set off against either. Unutilised losses carry forward to the next year with the same restrictions.

Are gains from share buybacks taxed differently now?

Yes. Budget 2024 changed the buyback tax treatment from 1 October 2024. Earlier, the company paid Buyback Distribution Tax and the proceeds were tax-free in shareholders'' hands. Now the proceeds are treated as deemed dividend in shareholders'' hands and taxed at slab rates, while the original cost of the shares becomes a capital loss available for set-off. This made buybacks significantly less attractive for high-income shareholders compared to the pre-October 2024 regime.

Sources and Further Reading

The capital gains rules described here are governed by the Income Tax Act, 2025 (which took effect 1 April 2026), incorporating the substantive provisions originally introduced by the Finance (No. 2) Act, 2024. Cost Inflation Index values are notified annually by the CBDT. For official references:

• Capital Gains — Income Tax Department (incometaxindia.gov.in)
• Income Tax e-Filing Portal — official ITR filing for AY 2027-28
• Salaried Individuals Return Filing Guide — Income Tax Department
• CBDT Notification No. 70/2025 — CII for FY 2025-26 fixed at 376

Last verified: 1 May 2026. This article will be updated when Budget 2027 is presented in February 2027.