Capital Gains Tax in India 2025: Short-Term vs Long-Term Explained
-
- by MI September 22, 2025
Capital Gains Tax in India 2025: Short-Term vs Long-Term Explained
Capital gains tax is a crucial part of India’s income tax system. Whether you are an investor in stocks, mutual funds, or real estate, understanding the difference between short-term and long-term capital gains is essential to plan your taxes efficiently in 2025.
1. What is Capital Gains Tax?
- Levy on profits from the sale of a capital asset.
- Assets include stocks, mutual funds, real estate, gold, bonds, and other investments.
- Tax treatment depends on holding period: short-term vs long-term.
2. Short-Term Capital Gains (STCG) in 2025
- Holding period: Less than 36 months (real estate) or less than 12 months (equities/mutual funds).
- Tax Rate: Equities & mutual funds – 15%, Other assets – as per income slab.
- STCG added to total taxable income (except equities).
3. Long-Term Capital Gains (LTCG) in 2025
- Holding period: More than 36 months (real estate) or more than 12 months (equities/mutual funds).
- Tax Rate: Equities & mutual funds – 10% on gains exceeding ₹1 lakh, Real estate & other assets – 20% with indexation benefits.
- Indexation adjusts cost for inflation (except equity gains).
4. STCG vs LTCG Comparison Table
| Aspect | Short-Term Capital Gains (STCG) | Long-Term Capital Gains (LTCG) |
|---|---|---|
| Holding Period | Equities/Mutual Funds: < 12 months Real Estate/Other Assets: < 36 months | Equities/Mutual Funds: > 12 months Real Estate/Other Assets: > 36 months |
| Tax Rate | Equities/Mutual Funds: 15% Other Assets: As per income slab | Equities/Mutual Funds: 10% (gains above ₹1 lakh) Other Assets: 20% with indexation |
| Indexation Benefit | No | Yes (except equities) |
| Added to Total Income | Yes (except equities) | No (except specific exemptions) |
| Exemptions | Limited | Available (Section 54, 54EC, 54F) |
5. Capital Gains Calculation Examples
| Asset Type | Purchase Price | Sale Price | Holding Period | Tax Type | Tax Payable |
|---|---|---|---|---|---|
| Equity Stock | ₹1,00,000 | ₹1,20,000 | 10 months | STCG | ₹3,000 (15%) |
| Mutual Fund | ₹2,00,000 | ₹2,50,000 | 14 months | LTCG | ₹5,000 (10% over ₹1 lakh exemption) |
| Real Estate | ₹30,00,000 | ₹40,00,000 | 5 years | LTCG | ₹2,00,000 (20% with indexation) |
6. Exemptions and Tax-Saving Tips
- Section 54: Invest in another residential property to save LTCG on property sale.
- Section 54EC: Invest in NHAI/REC bonds within 6 months to save LTCG on real estate.
- Section 54F: Invest entire sale proceeds of any long-term capital asset in residential property.
- Use tax-loss harvesting to offset gains with losses from other investments.
7. Filing Capital Gains in 2025
- Report capital gains under ITR-2 or ITR-3 depending on income type.
- Maintain purchase/sale records, contract notes, and investment statements.
- Pay advance tax if total tax liability (including capital gains) exceeds ₹10,000.
Conclusion
Understanding short-term and long-term capital gains tax helps investors plan their investment strategy and tax liability efficiently. The STCG vs LTCG comparison table makes it easy to know which tax applies, and using exemptions, indexation, and careful planning can legally reduce tax burden in 2025.
See More Related Blog
Aadhaar and Income Tax: Linking PAN and Filing ITR in 2025
-
- by MI
In 2025, linking your Aadhaar card with PAN is mandatory for filing Income Tax Returns (ITR) in India. Aadhaar-PAN linking ensures seamless verification, reduces tax…
Section 54: How to Save Capital Gains Tax on Property Sales in 2025
-
- by MI
Selling a property in India can attract long-term capital gains tax (LTCG) if held for more than 24 months (residential property). However, under Section 54 of the…
Advance Tax vs Self-Assessment Tax: Key Differences Explained
-
- by MI
Many taxpayers in India get confused between Advance Tax and Self-Assessment Tax. While both involve paying taxes directly to the government, they differ in terms of…
How to File Income Tax for Senior Citizens in 2025
-
- by MI
Senior citizens (60 years and above) enjoy higher exemption limits and special deductions while filing income tax in India. This guide explains, step by step, how senior…
How to Claim Home Loan Tax Benefits under Section 24(b) and 80C in 2025
-
- by MI
Buying a home is one of the biggest financial decisions in India, and the government provides multiple tax benefits on home loans to reduce the burden on taxpayers.…
Agricultural Income and Taxation Rules in India 2025
-
- by MI
Agriculture continues to be a backbone of the Indian economy, and the government provides special income tax exemptions to support farmers. However, agricultural income…
Impact of GST 2.0 on Income Tax Collections in India: 2025 Analysis
-
- by MI
The implementation of GST 2.0 in India marks a significant step towards tax simplification and improved compliance. While GST primarily affects indirect taxation, it…
Section 87A Rebate: Eligibility and Tax Savings in 2025
-
- by MI
Section 87A of the Income Tax Act provides a tax rebate for resident individuals with income below a certain threshold. Understanding eligibility, rebate amount, and tax…
House Property and Rental Income: Taxation Rules in 2025
-
- by MI
Rental income from house property is a common source of income in India. Understanding how house property income is taxed, deductions allowed, and filing rules is…
How NRI Income Tax Rules Work in India: 2025 Guide
-
- by MI
Non-Resident Indians (NRIs) have unique tax obligations in India. Understanding NRI income tax rules, exemptions, and filing requirements is crucial to stay compliant in…
Advance Tax Payment in India: Due Dates, Calculation & Penalties 2025 Guide
-
- by MI
Advance Tax is a system where taxpayers pay their tax liability in installments instead of a lump sum at the end of the financial year. This ensures timely collection of…
How Freelancers and Gig Workers Can Save Tax in India: 2025 Step-by-Step Guide
-
- by MI
Freelancers and gig economy workers are a rapidly growing part of India’s workforce. While this offers flexibility and higher earning potential, tax compliance can be…
TDS (Tax Deducted at Source) Explained: Rules, Rates & Latest Changes 2025
-
- by MI
Tax Deducted at Source (TDS) is a key part of India’s taxation system. It ensures tax is collected directly from the source of income, preventing evasion and improving…
Complete Guide to Income Tax Deductions and Exemptions in 2025
-
- by MI
This guide explains the most important deductions and exemptions available to taxpayers in India in 2025 (FY 2024–25 / AY 2025–26), how to claim them step-by-step,…
Top Tax-Saving Investments Under Section 80C for FY 2024-25 | Best Options for Maximum Savings
-
- by MI
When it comes to reducing your income tax liability, Section 80C of the Income Tax Act is the most widely used option by salaried employees and taxpayers in India. For…
Income Tax on Salaried Employees: Deductions, Rebates, and Exemptions 2025
-
- by MI
The financial year 2024–25 (Assessment Year 2025–26) brings several important updates for salaried employees in India. With reforms in the Income Tax Act, choosing…
Step-by-Step Guide to Filing Income Tax Returns (ITR) Online in 2025
-
- by MI
Filing your Income Tax Return (ITR) online has become easier than ever in 2025, thanks to digital initiatives by the Income Tax Department. The process is completely…
Old vs New Tax Regime 2025: Which One Should You Choose?
-
- by MI
With the government continuing to promote the new tax regime in 2025 as the default option, taxpayers are left with an important question – Old vs New Tax Regime: Which…
Income Tax Slabs in India 2025: Latest Updates and Comparison with 2024
-
- by MI
The Indian government announces Income Tax Slabs every year during the Union Budget. For FY 2025–26, the government has retained the focus on the new simplified tax…
Comments
Add new comment