Capital Gains · Feb 2026

Capital Gains Tax Changes from Budget 2025: What Investors Need to Know for FY 2025-26

While no major overhaul occurred in Budget 2025, clarifications and extensions apply: LTCG exemption limit remains ₹1.25 lakh with 12.5% tax; STCG on equities at 20%. Sovereign wealth/pension funds get infrastructure investment exemptions extended to 2030. ULIP taxation rationalized for older policies. Use our Capital Gains Calculator for updated estimates.

Key Points

Equities/Equity Funds: STCG 20% (under 12 months); LTCG 12.5% (over 12 months, above ₹1.25 lakh).
Property/Debt: LTCG 20% with indexation (property); debt funds short-term if under 24 months.
Exemptions Extended: SWF/PF infrastructure investments tax-free till 2030.
Loss Harvesting: Carry forward losses up to 8 years.

Pro Tip: Hold longer for lower rates; reinvest property gains under Section 54/54EC for full exemption. Calculate capital gains →

Frequently Asked Questions

How are equity gains taxed now?

Equity shares and equity mutual funds held under 12 months are short-term and taxed at 20%. Held beyond 12 months they are long-term, taxed at 12.5%, and only on gains above the ₹1.25 lakh annual exemption.

What is the ₹1.25 lakh LTCG exemption?

It is an annual threshold: the first ₹1.25 lakh of long-term equity gains in a financial year is not taxed. Investors sitting on large unrealised gains often book a slice each year specifically to use this allowance rather than letting it lapse.

How are property and debt investments treated?

Property long-term gains are taxed at 20% with indexation. Debt funds are treated as short-term if held under 24 months. The holding-period thresholds differ from equity, so the same sale date can produce very different tax depending on the asset.

Can I offset losses against gains?

Yes. Capital losses can be carried forward for up to eight years and set off against future capital gains, provided you file your return on time for the year in which the loss arose. Missing that filing forfeits the carry-forward.

How can I reduce tax on property gains?

Sections 54 and 54EC allow full exemption where property gains are reinvested — into another residential property under Section 54, or into specified bonds under Section 54EC. Both carry strict time limits, so plan the reinvestment before you sell, not after.

Capital Gains Tax Changes from Budget 2025: What Investors Need to Know for FY 2025-26

Key Points

Frequently Asked Questions

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