The capital gains tax regime can be complex, with different rates & threshold period for different asset classes & investment structures. We provide below a handy table, that helps explain the tax-rates across asset clases.
New Tax Structure (Post 23-Jul-24)
Asset Types | ST CG Rate | LT CG Rate | LT Holding Period |
---|---|---|---|
Equity Stocks, Equity MF, Equity FOF (>90% underlying Equity ETF) Listed REITs/InVits | 20% | 12.5% | 12 months |
Listed Bonds (ex-MLDs) ETFs (Gold/Silver/International) | Slab-rate | 12.5% | 12 months |
Overseas Stocks | 20% | 12.5% | 24 months |
Other MF’s (Non-Equity, Non-Debt) – Gold/Silver/International FOF Overseas Assets (Funds, bonds etc) Real Estate (Physical)* Listed Bonds Physical Gold/Art/Other Assets Unlisted Stocks/REITs/InVits Debt MF (acquired prior to 1-Apr-23) | Slab-rate | 12.5% | 24 months |
Debt MF/Specified MF, MLDs, Unlisted Bonds | Slab-rate | Slab-rate |
– Applicable for assets sold after 23-Jul-24
* for real estate bought before 23/July/2024, the LTCG upon sale, one has 2 options — a) no indexation benefit and taxed at 12.5% or b) indexation benefit and taxed at 20%
– These rates are only for capital gains (income from other sources such as interest would be taxed at different rates)
– Specified MF’s include MF Schemes with >65% in SEBI regulated debt & Money Mkt instruments
– Equity MF’s include MF Schemes with >65% in Equity
– LT Capital Gains on Equity Stocks & MF’s are exempt up to Rs. 1.25 lakhs per year
Earlier Tax Structure (Prior to 23-Jul-24)
Asset Type | Short-Term CG Rate | Long-Term CG Rate | LT Holding Period | Indexation Period |
---|---|---|---|---|
Equity Shares | 15% | 10% (in excess of 1 lakh) | 1 year | No |
Equity MF (1) | 15% | 10% (in excess of 1 lakh) | 1 year | No |
Non-Equity MF (2) | Slab Rate | Slab Rate | NA | NA |
Unlisted Shares (3) | Slab Rate | 20% | 2 years | Yes |
Listed Bonds | Slab Rate | 10% | 1 year | No |
Real Estate | Slab Rate | 20% | 2 year | Yes |
REIT/InVit | 15% | 10% (in excess of 1 lakh) | 3 years | No |
Physical Gold | Slab Rate | 20% | 3 years | Yes |
Soveriegn Gold Bonds | Slab Rate | 20% (tax free if held till maturity of 8 years) | 5 years | Yes |
Overseas Equity Stocks | Slab Rate | 20% | 2 years | Yes |
Overseas Funds | Slab Rate | 20% | 3 years | Yes |
CLASSIFICATIONS
- (1) Equity Mutual Funds: Includes pure equity funds, aggressive hybrid, equity savings & arbitrage funds (since arbitrage is considered equity from a tax perspective)
- (2) Non-Equity Mutual Funds: include all Mutual funds with less than 35% of investment in Indian Equities (i.e. Debt funds, conservative hybrid funds, international feeder funds, Gold Funds etc) | ETFs (International, Gold etc) are also considered non-Equity MF’s from a taxation perspective
- (3) Direct International via International Brokers: taxed similar to Unlisted Shares
Setting-off for Capital Losses
- Long-term Capital Losses, can only be set of against Long-Term Capital Gains.
- Short-term Capital Losses, can be set of against Short-term & Long-Term Capital Gains.
- Capital losses can be carry-forwarded for 8 years, from the assessment year in which the loss was computed