Learning article
Capital Gains Tax Basics for Investors
A beginner’s look at how shares, mutual funds, and property are taxed under capital gains — holding periods, tax rates, and set‑off rules.
Quick takeaways
Short‑term vs long‑term classification depends on the asset and holding period.
Long‑term gains on equity above ₹1 lakh are taxed at 10% (without indexation).
You can set off losses within the same year and carry forward unabsorbed losses.
Overview
What counts as a capital gain?
A capital gain arises when you sell a capital asset (shares, mutual fund units, property) at a higher price than what you bought it for.
The tax rate depends on how long you held the asset and the type of asset.
Important facts
Holding periods and classification
Listed equity shares & equity mutual funds: 12 months to become long‑term.
Other assets (debt funds, property, gold): 24 months (or 36 months for certain property sales) to be long‑term.
Short‑term capital gains (STCG) are taxed at slab rates for non‑equity, and 15% for equity STCG.
Key concepts
Set‑off and carry forward rules
You can set off short‑term losses against both short‑term and long‑term gains, but long‑term losses can only be set off against long‑term gains.
Unabsorbed losses can be carried forward for up to 8 years, provided you file ITR on time.
Key takeaways
Practical steps for investors
Track purchase dates and costs diligently — you’ll need them for exact calculations.
Use the ITR‑2 or ITR‑3 form (not ITR‑1) if you have capital gains.
Consider tax‑loss harvesting near the end of the financial year.
FAQs
Common questions
Keep reading
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