India Capital Gains TaxLong-term capital gains tax
Sections 197 and 198 of the Income-tax Act, 2025 tax long-term capital gains at 12.5% (read on 13 November 2026). On listed equity shares and equity-oriented fund units, where securities transaction tax has been paid, only the part of the gains above ₹1,25,000 in the year is taxed (section 198(2)); on other long-term assets the tax applies from the first rupee (section 197).
Tax on long-term gains, with other income of ₹10 lakh
| Gain | Listed equity (held 18 months) | Other asset (held 30 months) |
|---|---|---|
| ₹1,00,000 | ₹0 | ₹13,000 |
| ₹1,25,000 | ₹0 | ₹16,250 |
| ₹3,00,000 | ₹22,750 | ₹39,000 |
| ₹5,00,000 | ₹48,750 | ₹65,000 |
| ₹10,00,000 | ₹1,13,750 | ₹1,30,000 |
| ₹25,00,000 | ₹3,08,750 | ₹3,25,000 |
| ₹50,00,000 | ₹6,33,750 | ₹6,50,000 |
Figures include the 4% cess and exclude surcharge.
Who can use the tax-free limit
The ₹1,25,000 limit in section 198 is a limit on the gains of the year, not a deduction per sale. Securities transaction tax must have been paid on the purchase and the sale of the share (on the sale only for fund and trust units); the condition does not apply to a sale on a recognised stock exchange in an International Financial Services Centre for foreign currency (section 198(4)).
Common questions
Is there a tax-free amount on long-term gains?
Only on listed equity shares and equity-oriented fund units with securities transaction tax paid: section 198 taxes the part of the gains above ₹1,25,000 in the year. Other long-term gains are taxed from the first rupee at 12.5% (section 197).
Does a low income reduce the tax on gains?
For a resident individual or HUF whose other income is below the maximum amount not chargeable to tax, the gains are reduced by the shortfall before the tax is worked (sections 197(2) and 198(3)). The calculator applies this with the ₹4,00,000 first slab of the new regime.
Sources
- The Income-tax Act, 2025, as published in the Gazette of India Extraordinary: section 2 (short-term and long-term capital asset), sections 196, 197 and 198 (tax on capital gains). The enacted text was read on 13 November 2026.
- Slab tax on other income, the ₹4,00,000 first slab and the 4% cess for 2026-27: the Tax Slabs section of this family (its own sources apply).
Rules read on 13 November 2026 from the Income-tax Act, 2025. Surcharge, losses, reinvestment exemptions and indexation are not worked. This site is independent, not connected with the Income Tax Department, and gives arithmetic, not tax advice. Ask a chartered accountant about your own sale.