Understand Capital Gains. Know Your Tax.
Learn how capital gains tax works in India when you sell property, shares, mutual funds or other capital assets. Understand short-term and long-term gains, holding periods, tax rates, losses, exemptions and the information needed before estimating your tax.
A profitable sale can create a tax obligation
Capital gains generally arise from the transfer of a capital asset. Depending on your situation, the asset could be property, shares, securities, mutual funds or another asset covered by the applicable tax rules.
The calculation is not always a simple difference between the purchase price and sale price. The relevant cost, transfer expenses, improvement costs, holding period, asset category, exemptions and other provisions can affect the final taxable gain.
Three concepts you need to understand
Capital gains become much easier to understand once the asset, gain and applicable tax treatment are separated.
Capital Asset
A capital asset can include property, securities and other assets covered by the applicable provisions. Classification of the asset is important because different rules may apply.
Capital Gain
A capital gain generally results from transferring a capital asset after applying the relevant computation rules to the transaction.
Capital Gains Tax
The taxable gain may be subject to a specific rate or treatment depending on the asset, holding period and provisions applicable to the transaction.
Work through the transaction step by step
The most useful way to approach capital-gains tax is to build the calculation from the underlying transaction instead of starting with a tax percentage.
Short-term or long-term? It depends on the asset
The holding period used to classify a gain is not identical for every asset. Always check the rule applicable to the specific investment or property.
Capital gains tax rates are asset specific
There is no single capital-gains rate that applies to every sale. The relevant provision and asset category determine the applicable treatment.
Short-Term Capital Gain
20%Certain specified short-term capital gains can be taxed at a special rate of 20%. The applicable asset and provision must be checked before using this rate.
Long-Term Capital Gain
12.5%Certain specified long-term capital gains can be subject to a 12.5% special rate. Exemptions and asset-specific provisions can affect the final liability.
Estimate your capital gains before you make a decision
If you are selling an investment or property, an estimate can help you understand the potential tax impact before completing the transaction.
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Common Capital Gains Questions
Clear answers to common questions before selling property or investments.
Capital gains tax applies to taxable gains arising from the transfer of capital assets under applicable tax provisions. The rate and calculation depend on the asset, holding period and relevant rules.
Short-term and long-term capital gains are generally distinguished using the holding period applicable to the particular asset. The required period is not identical for every type of investment or property.
A gain from the transfer of eligible immovable property can fall under capital-gains provisions. The final calculation depends on acquisition details, holding period, transfer details and applicable provisions.
Capital-loss set-off and carry-forward are governed by specific tax rules. The nature of the loss, nature of the gain and applicable conditions need to be checked before making a claim.
Certain capital-gains relief and exemption provisions may apply when their specific conditions are satisfied. The relevant asset, transaction and applicable provision should be reviewed before claiming relief.
Understand the Tax Before You Sell
Review your asset, holding period, transaction details and applicable tax treatment before making an important investment or property-sale decision.
Calculate Capital Gains →