Capital Gains Tax on Stocks and Mutual Funds: 2025 Update

The Union Budget 2024 brought significant changes to capital gains taxation. Here's what investors need to know for the current assessment year.

Equity Shares and Equity Mutual Funds

Short-Term Capital Gains (STCG) - **Holding period:** Less than 12 months - **Tax rate:** 20% (increased from 15% in Budget 2024) - Listed on a recognized stock exchange and STT paid

Long-Term Capital Gains (LTCG) - **Holding period:** 12 months or more - **Tax rate:** 12.5% (increased from 10% in Budget 2024) - **Exemption:** First Rs 1.25 lakh of LTCG is exempt per financial year (increased from Rs 1 lakh) - Indexation benefit has been removed for all asset classes

Debt Mutual Funds

After April 2023 changes, debt mutual funds purchased after 1 April 2023 are taxed at your income tax slab rate regardless of holding period. There is no distinction between short-term and long-term for these funds.

Real Estate

• Holding period for LTCG: 24 months
• LTCG tax rate: 12.5% without indexation
• Section 54 exemption available if you reinvest in another residential property

Tax-Loss Harvesting Strategy

• Short-term losses can offset both STCG and LTCG
• Long-term losses can only offset LTCG
• Unabsorbed losses can be carried forward for 8 years

Important Dates

• 31 July: ITR filing deadline for individuals
• 15 June, 15 September, 15 December, 15 March: Advance tax deadlines if capital gains are significant

Record Keeping

• Purchase date and price for all investments
• Sale date and price
• STT paid (shown in your broker's contract note)
• Dividend income received

A qualified CA can help you optimize your capital gains tax liability through legitimate planning strategies.