Question 1

What are the capital gains tax rates for FY 2025-26?

Accepted Answer

Long-term capital gains are taxed at 12.5% without indexation for all assets, with a ₹1.25 lakh annual exemption for listed shares and equity mutual funds. Short-term gains on listed equity are taxed at 20% under Section 111A; short-term gains on property, gold and unlisted shares are added to your income and taxed at your slab rate. A 4% health and education cess applies on top, plus surcharge for high incomes.

Question 2

Should I choose 20% with indexation or 12.5% without indexation?

Accepted Answer

The choice is available only to resident individuals and HUFs, and only for land or buildings acquired before 23 July 2024. You pay whichever is lower. Indexation generally wins when the property was held for many years and appreciated modestly; the flat 12.5% wins when the gain is large relative to the holding period. This calculator computes both and highlights the lower one.

Question 3

How is the indexed cost of acquisition calculated?

Accepted Answer

Indexed cost = Cost of acquisition × (Cost Inflation Index of the year of sale ÷ CII of the year of purchase). For assets bought before 1 April 2001 you may substitute the fair market value as on 1 April 2001 and index from FY 2001-02 (CII 100). The CII for FY 2025-26 is 376.

Question 4

What is the holding period for long-term capital gains?

Accepted Answer

From 23 July 2024 there are only two holding periods: 12 months for listed securities (shares, equity mutual funds, listed bonds, REITs/InvITs) and 24 months for everything else including land, building, gold, jewellery and unlisted shares. Debt mutual funds purchased after 31 March 2023 are always taxed at slab rates regardless of holding period.

Question 5

How can I save tax on capital gains from selling property?

Accepted Answer

Section 54 exempts gains reinvested in another residential house (purchase within 2 years or construction within 3 years). Section 54F applies when you sell any other long-term asset and buy one house with the net sale value. Section 54EC allows investing up to ₹50 lakh in NHAI/REC/PFC bonds within 6 months, locked in for 5 years. If you cannot reinvest before your ITR due date, deposit the amount in a Capital Gains Account Scheme account.

Question 6

Is TDS deducted when I sell property?

Accepted Answer

Yes. For a resident seller, the buyer must deduct 1% TDS under Section 194-IA if the consideration is ₹50 lakh or more. For an NRI seller, TDS under Section 195 is deducted on the capital gain at 12.5% plus surcharge and cess — or on the whole sale value if no lower-deduction certificate is obtained. You claim credit for this TDS in your ITR.

Question 7

Which ITR form should I use to report capital gains?

Accepted Answer

Salaried individuals with capital gains file ITR-2. If you also have business or professional income, file ITR-3. Capital gains cannot be reported in ITR-1 or ITR-4. Schedule CG must show asset-wise details, and Schedule 112A is required for listed equity LTCG.

Question 8

Can capital losses be carried forward?

Accepted Answer

Yes. Short-term capital loss can be set off against both short-term and long-term gains; long-term capital loss can only be set off against long-term gains. Unadjusted losses can be carried forward for 8 assessment years — but only if you file your ITR on or before the due date.

Asset	Long-term after	LTCG rate	STCG rate
Listed shares / Equity MF (STT paid)	12 months	12.5% above ₹1.25 lakh	20%
Land & building	24 months	12.5% (or 20% indexed if bought before 23-Jul-2024)	Slab rate
Gold, jewellery, unlisted shares	24 months	12.5%	Slab rate
Debt mutual funds (bought after 31-Mar-2023)	Not applicable	Slab rate	Slab rate

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