Capital Gains Tax Changes in Budget 2025: Higher Rates & New Exemptions for FY 2025-26
The Union Budget 2025 (presented February 2025) introduced significant revisions to capital gains taxation to encourage long-term holding and rationalize rates. Short-Term Capital Gains (STCG) on equity shares and equity-oriented mutual funds now attract 20% tax (up from 15%), while Long-Term Capital Gains (LTCG) are taxed at 12.5% (up from 10%) above ₹1.25 lakh exemption (increased from ₹1 lakh). These changes apply to FY 2025-26 transactions. Use our Capital Gains Calculator to estimate your updated liability.
Key Changes at a Glance
- STCG on Equities/Equity Funds: Increased to 20% (for holdings under 12 months).
- LTCG on Equities/Equity Funds: 12.5% above ₹1.25 lakh exemption (for holdings over 12 months).
- Other Assets (Property, Debt Funds): LTCG remains 20% with indexation for property; debt funds treated as short-term if held under 24 months.
- ULIP Taxation Rationalized: Non-exempt ULIPs (premium over ₹2.5 lakh) now taxed as capital gains, similar to equity funds.
Strategies to Minimize Tax
- Hold equities/equity funds longer than 12 months to benefit from lower LTCG rates.
- Harvest losses to offset gains (carry forward up to 8 years).
- Reinvest property gains under Section 54/54EC/54F for exemptions.
Example: ₹5 Lakh Equity Gain (Sold After 13 Months)
Exemption: ₹1.25 lakh | Taxable: ₹3.75 lakh @12.5% = ₹46,875 tax (vs. ~₹40,000 earlier).
Pro Tip: Track holding periods carefully — Budget 2025 aims to promote long-term investment. Consult a CA for complex cases like property or ULIPs. Calculate capital gains →