Capital Gains Tax on Stocks & Mutual Funds: FY 2026-27 Rules

Key Capital Gains Tax Rates (FY 2026-27)

Type	Tax Rate	Exemption
Short Term Capital Gains (STCG)	20%	None
Long Term Capital Gains (LTCG)	12.5%	Rs 1,25,000 per year

What Are Capital Gains?

Capital gains are the profits you earn when you sell a capital asset (stocks, mutual funds, property, gold, etc.) for more than the purchase price. The tax treatment depends on two factors: the type of asset and the holding period.

Holding Periods: Short Term vs Long Term

Whether your gains are classified as short-term or long-term depends on how long you held the asset before selling:

Asset Type	Short Term (STCG)	Long Term (LTCG)
Listed Equity Shares	Held for 12 months or less	Held for more than 12 months
Equity Mutual Funds	Held for 12 months or less	Held for more than 12 months
Debt Mutual Funds	Held for 24 months or less	Held for more than 24 months
Unlisted Shares	Held for 24 months or less	Held for more than 24 months
Real Estate / Property	Held for 24 months or less	Held for more than 24 months
Gold / Jewellery	Held for 24 months or less	Held for more than 24 months

Equity vs Debt: Key Differences

The tax treatment varies significantly between equity and debt instruments:

Equity (Stocks & Equity Mutual Funds)

• STCG: Taxed at 20% (if held for 12 months or less)
• LTCG: Taxed at 12.5% on gains exceeding Rs 1,25,000 per year
• STT: Securities Transaction Tax is applicable on equity transactions
• Shorter holding period (12 months) to qualify as long-term

Debt (Debt Mutual Funds & Bonds)

• STCG: Added to your income and taxed at your applicable slab rate
• LTCG: Taxed at 12.5% (holding period of more than 24 months)
• Longer holding period (24 months) required for long-term classification
• No STT applicable on debt fund transactions

LTCG Exemption of Rs 1.25 Lakh

For FY 2026-27, long-term capital gains on equity up to Rs 1,25,000 per financial year are exempt from tax. This means:

• If your total LTCG from equity is Rs 1,25,000 or less, you pay zero LTCG tax
• If your LTCG is Rs 2,00,000, you pay 12.5% tax only on Rs 75,000 (i.e., Rs 9,375)
• This exemption applies per financial year, not per transaction

How to Calculate Capital Gains

1. Determine the sale price of your asset
2. Subtract the purchase price (cost of acquisition)
3. Subtract expenses like brokerage, STT (where applicable)
4. Apply indexation if applicable (for certain long-term assets)
5. Check holding period to classify as STCG or LTCG
6. Apply the appropriate tax rate

Tax-Loss Harvesting

You can offset capital losses against capital gains to reduce your tax liability:

• STCG losses can be set off against both STCG and LTCG
• LTCG losses can only be set off against LTCG
• Unabsorbed losses can be carried forward for up to 8 assessment years
• You must file your ITR on time to carry forward losses

Frequently Asked Questions

Do I pay tax if my LTCG is below Rs 1.25 lakh?

No. For FY 2026-27, LTCG on equity up to Rs 1,25,000 is exempt from tax. You only pay 12.5% on gains exceeding this threshold.

What is the STCG tax rate for FY 2026-27?

Short-term capital gains on equity shares and equity mutual funds are taxed at a flat rate of 20% for FY 2026-27.

Is indexation available for equity investments?

Indexation benefit is generally not applicable for listed equity shares and equity mutual funds. It may apply to certain other asset classes like property and debt funds depending on the rules in effect.

Do I need to pay advance tax on capital gains?

Yes, if your total tax liability (including capital gains tax) exceeds Rs 10,000 in a financial year, you are required to pay advance tax. Use our Advance Tax Calculator to plan your payments.

Calculate Your Capital Gains Tax

Use our free calculator to compute your exact capital gains tax liability for FY 2026-27. It handles equity, debt, property, and other asset types automatically.