Calculate your tax liability on Listed Equity, Equity Mutual Funds, Debt Funds, Real Estate, and Gold for FY 2026-27 (AY 2027-28).
Asset Class
Investment Details
Tax Payable
₹0
Total Profit
+₹50,000
Exemption Used
₹50,000
Post-Tax Return
₹50,000
Profit Distribution
Note: Calculations are based on FY 2025-26 rules. LTCG on Equity is 12.5% above ₹1.25 Lakhs. Real Estate LTCG is 12.5% without indexation.
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View AllFormulas, statutory slab logic, and edge-case exceptions authored and reviewed by Ganamurthy N N (M.S. Software Engineering, BITS Pilani | CFP® Certification Candidate — 3/4 Modules Cleared) • View Editorial Methodology →
Capital Gains Taxation & Set-Off Formula
Gains on listed equity and equity mutual funds held for more than 12 months qualify as LTCG, taxed at 12.5% on gains exceeding the statutory ₹1.25 Lakh annual exemption under Section 112A. Short-term gains (<12 months) are taxed at 20% under Section 111A.
Equity LTCG (>12 months) = Sale Value - Purchase Cost - Transfer Brokerage
Exempt LTCG = Min(Net LTCG, ₹1,25,000)
Taxable Equity LTCG = Max(0, Net LTCG - ₹1,25,000)
LTCG Tax Payable = Taxable Equity LTCG × 12.5%
Equity STCG (<12 months) = Sale Value - Purchase Cost - Brokerage
STCG Tax Payable = Net STCG × 20%
Total Capital Gains Tax = (LTCG Tax + STCG Tax) × 1.04 (4% Cess)Flat 12.5% tax on long-term gains exceeding ₹1.25 Lakhs per financial year.
Flat 20% tax on short-term gains with STT paid.
Aggregate tax-free threshold across listed equities, equity mutual funds, and business trusts.
Worked Example: Multi-Asset Capital Gains Portfolio
Scenario: Investor realizes ₹2,75,000 in Equity LTCG, ₹50,000 in Equity STCG, and has an unabsorbed Short-Term Capital Loss of ₹25,000 in FY 2026-27.
(₹18,750 + ₹5,000) × 1.04. Investor saved ₹15,600 from the ₹1.25L exemption!
Capital Gains Taxation Matrix Across Indian Asset Classes
Holding periods and statutory rates updated for FY 2026-27
| Asset Class | Short-Term Holding Period | STCG Tax Rate | Long-Term Holding Period | LTCG Tax Rate & Exemption |
|---|---|---|---|---|
| Listed Equity Shares & Equity MFs | < 12 Months | 20% (Sec 111A) | > 12 Months | 12.5% above ₹1.25 Lakhs (Sec 112A) |
| Real Estate / Immovable Property | < 24 Months | Taxed at Income Slab Rate | > 24 Months | 12.5% without indexation (Grandfathered option available) |
| Physical Gold & Gold ETFs | < 24 Months (Physical) / < 12M (ETF) | Taxed at Income Slab Rate | > 24M (Physical) / > 12M (ETF) | 12.5% (No ₹1.25L exemption) |
| Specified Debt Mutual Funds | Any duration (purchased after Apr 1, 2023) | Taxed at Income Slab Rate | Any duration | No LTCG status. Always slab rate |
| Arbitrage Mutual Funds | < 12 Months | 20% (Treated as Equity) | > 12 Months | 12.5% above ₹1.25 Lakhs (Treated as Equity) |
* For properties acquired before July 23, 2024, resident individuals can choose between 12.5% without indexation or 20% with indexation.
What Most Taxpayers & Investors Miss
Always File Your ITR Before the Due Date to Carry Forward Losses
Under Section 80, capital losses (STCL and LTCL) can only be carried forward for 8 assessment years if you file your ITR on or before the statutory due date (July 31). Late filing permanently forfeits loss carry-forwards.
Arbitrage Funds are the High-Tax-Bracket Alternative to Debt MFs
Because Debt Mutual Funds are taxed at slab rates (up to 39%), parking emergency funds in Arbitrage Funds offers equity taxation (12.5% LTCG after 12 months with ₹1.25L exemption) with virtually zero credit risk.
Unlisted Shares Have a 24-Month Holding Threshold
Unlike listed equity which qualifies for LTCG after 12 months, unlisted startup shares and pre-IPO stock require 24 months of holding to qualify for long-term capital gains.
Frequently Asked Questions & Edge Cases
What are the exact set-off rules between Short-Term (STCL) and Long-Term (LTCL) Capital Losses?
Under Sections 70 and 71 of the Income Tax Act: 1. Short-Term Capital Loss (STCL) can be set off against BOTH STCG and LTCG across any capital asset class. 2. Long-Term Capital Loss (LTCL) can ONLY be set off against Long-Term Capital Gains (LTCG). It cannot be set off against STCG or normal salary income. 3. Unabsorbed losses can be carried forward for up to 8 assessment years, provided your ITR was filed on or before the statutory due date.
Does the "Wash Sale Rule" apply in India when doing Tax Harvesting?
The Indian Income Tax Act does not contain a specific 30-day "Wash Sale Rule" like the United States IRS code. However, if you sell and repurchase the exact same stock on the same trading day, Indian tax law classifies the transaction as an Intraday Speculative Trade under Section 43(5), preventing loss set-off against regular capital gains. To harvest tax legally in India, execute the sell order on Day 1, take physical delivery settlement (T+1), and repurchase the stock on Day 2—or immediately switch proceeds into a correlated alternative (such as selling a Nifty 50 Index Fund and buying a Sensex Index Fund).
How does FIFO (First-In, First-Out) impact capital gains on ongoing SIPs?
Under Section 45(2A) and Rule 40 of Income Tax Rules, capital gains on mutual fund units and shares are calculated strictly on a First-In, First-Out (FIFO) basis. When you redeem units, the oldest units purchased through your earliest SIP installments are sold first. Each monthly SIP installment has its own unique 12-month clock to determine whether it qualifies for STCG or LTCG.
Does the ₹1.25 Lakh LTCG exemption apply to Debt Mutual Funds, Gold ETFs, or Foreign Stocks?
No. The ₹1,25,000 annual LTCG exemption under Section 112A is strictly reserved for: 1. Listed Indian Equity Shares where Securities Transaction Tax (STT) was paid on purchase and sale. 2. Equity-oriented Mutual Funds (schemes investing ≥ 65% in domestic equities). 3. Business Trust units (REITs and InvITs). Debt MFs, Gold ETFs, US stocks, and unlisted shares do NOT get the ₹1.25 Lakh exemption.
Can I set off capital losses against Salary or Business income?
No. Under Section 71(3) of the Income Tax Act, capital losses (whether short-term or long-term) cannot be set off against income under any other head, including Salaries, House Property, or Business/Profession profits. Capital losses can only be offset against capital gains.
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