The rates on listed equity moved in July 2024 and a remarkable number of people are still calculating with the old ones. If you hold shares or equity mutual funds, these are the numbers that apply now.
The current position
| Holding period | Rate | Exemption | |
|---|---|---|---|
| Short term | 12 months or less | 20% | — |
| Long term | More than 12 months | 12.5% | ₹1,25,000 per year |
Applies to STT-paid listed equity shares and equity-oriented mutual funds. Rates effective 23 July 2024; short term rose from 15%, long term from 10%, and the annual exemption from ₹1,00,000. Under the Income-tax Act, 2025 the governing provisions are renumbered — the old Sections 111A and 112A. Confirm the current section references before relying on them in a filing.
The exemption is use-it-or-lose-it
This is the single most actionable point. The ₹1.25 lakh long-term exemption resets every financial year and cannot be carried forward. An investor sitting on large unrealised long-term gains who never sells is leaving that allowance unused, year after year.
Booking gains up to the exemption and reinvesting — sometimes called harvesting — realises the allowance without changing your underlying position materially. It needs care around the specific securities and your own circumstances, and it is not advice for a general audience, but it is worth understanding that the allowance exists and expires.
Set-off rules people get wrong
Losses do not offset freely, and the asymmetry catches people out.
Short-term capital loss can be set off against both short-term and long-term capital gains.
Long-term capital loss can be set off only against long-term capital gains.
Unabsorbed capital losses carry forward for eight assessment years — but only if the return was filed by the due date. Miss the deadline and the carry-forward is lost, which turns a filing slip into a permanent cost.
Carry-forward of capital losses depends on filing by the due date. Miss it, and a procedural slip becomes a permanent loss of relief.
Where advance tax collides with this
Capital gains are the reason advance tax estimates fall apart. You cannot forecast in June a gain you will realise in November.
The law accommodates this: tax on a capital gain can be paid in the instalment falling due after the gain arises, rather than being back-dated across earlier instalments. But you have to actually do it. A large gain in November with no corresponding December instalment produces interest that was entirely avoidable.
Documentation worth keeping
Before filing season
- Broker capital gains statement for the full year, not just contract notes.
- Mutual fund capital gains statement from the registrar — CAMS or KFintech.
- Reconciliation against your AIS, which now reports securities transactions.
- For pre-2018 holdings, the grandfathering computation — fair market value as at 31 January 2018.
Most of this is available as a download and takes minutes to assemble in April. Reconstructing it in July, from a year of trades, takes considerably longer and tends to produce numbers that do not match what the department already has.
This article is general guidance as at 3 June 2026 and is not advice on any specific situation. References reflect the Income-tax Act, 2025 (in force from 1 April 2026), the CGST and IGST Acts as amended, and GST rates effective 22 September 2025. Please obtain advice on your own facts before acting.