Capital Gains Tax: STCG & LTCG on Shares, Mutual Funds & Property (Budget 2024)

Capital Gains Tax is the direct tax levied on the profits or gains realized from the sale, transfer, or exchange of 'Capital Assets' including listed equity shares, mutual funds, residential property, commercial real estate, gold, and private unlisted shares. Under Section 45 of the Income Tax Act, capital gains are categorized into Short-Term Capital Gains (STCG) or Long-Term Capital Gains (LTCG) depending on the holding period of the specific asset class.

Statutory Framework & Key Operational Rules

The Union Budget 2024 introduced sweeping structural changes to the Indian capital gains tax regime. For listed equity shares and equity-oriented mutual funds held for over 12 months, Long-Term Capital Gains (LTCG) under Section 112A are now taxed at a flat rate of 12.5% (increased from 10%), with the annual aggregate exemption threshold raised from ₹1 Lakh to ₹1.25 Lakhs. Short-Term Capital Gains (STCG) on equity under Section 111A are now taxed at 20% (up from 15%). For immovable real estate, the holding period for long-term status remains 24 months, with LTCG taxed at 12.5% without indexation benefits for properties sold on or after July 23, 2024 (with grandfathering options for properties purchased prior to the cut-off date).

Procedural Compliance & Professional Advisory

Navigating capital gains requires strategic deployment of statutory tax exemptions. Taxpayers selling residential property or long-term assets can legally eliminate or reduce their LTCG liability by reinvesting capital gains into another residential house under Section 54 / Section 54F, or by purchasing specified Capital Gains Bonds (REC, PFC, NHAI) under Section 54EC up to ₹50 Lakhs within 6 months of sale. Professional tax advisors provide end-to-end capital gains computation, Schedule CG mapping, and tax saving investment structuring.