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Taxation Structure of Different Investment Structures

Last Updated: January 15, 2025

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 TypesST CG RateLT CG RateLT 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-rate12.5%12 months
Overseas Stocks20%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-rate12.5%24 months
Debt MF/Specified MF, MLDs, Unlisted BondsSlab-rateSlab-rate
Note:
– 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 TypeShort-Term CG RateLong-Term CG RateLT Holding PeriodIndexation Period
Equity Shares15%10% (in excess of 1 lakh)1 yearNo
Equity MF (1)15%10% (in excess of 1 lakh)1 yearNo
Non-Equity MF (2)Slab RateSlab RateNANA
Unlisted Shares (3)Slab Rate20%2 yearsYes
Listed BondsSlab Rate10%1 yearNo
Real EstateSlab Rate20%2 yearYes
REIT/InVit15%10% (in excess of 1 lakh)3 yearsNo
Physical GoldSlab Rate20%3 yearsYes
Soveriegn Gold BondsSlab Rate20% (tax free if held till maturity of 8 years)5 yearsYes
Overseas Equity StocksSlab Rate20%2 yearsYes
Overseas FundsSlab Rate20%3 yearsYes

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