Capital Gains Tax Calculator (STCG & LTCG)
Compute your exact equity capital gains tax liability, post-tax net profit, and effective tax deduction incorporating the revised Indian tax rules and statutory 4% health & education cess.
Total Tax Deduction
₹22,750
Effective Tax Rate: 7.58%
Capital Gains Tax Calculator: LTCG & STCG Tax Calculation Rules, Rates & Guide
Profit earned on sale of an investment or capital asset is treated different from your salary or business profit. This profit is classified as Capital Gain in taxation which has its own set of holding period rules and tax rates.
Whether you're booking profits on stocks, redeeming mutual funds, selling immovable property or reallocation gold, it is important to understand how Short Term & Long Term Capital Gains are calculated in order to know your true after tax returns.
Use our free capital gains tax calculator given above to calculate your tax liability (on equity, debt, property, gold) or continue reading to understand capital gains tax, exemptions, calculation method and rates in detail.
What is Capital Gains Tax?
The profit which is earned by selling a capital asset is called Capital Gains. If the asset is sold at a price higher than the purchase price, it is called a Capital Gain and if it is sold at a price lower than the purchase price, it is called a Capital Loss.
Capital Gains Tax is levied on profits made from selling capital assets like stocks, shares, mutual funds, property, etc. In India, taxation on capital gains is done based on the time for which the asset has been held by the owner.
In India, there are two types of capital gains:
1. Short Term Capital Gains (STCG)
These are gains generated when an asset is sold before the mandated long term holding period. STCG tax rate is either a special concession (listed equities) or a progressive tax rate as per your ITR slab.
2. Long Term Capital Gains (LTCG)
These are gains realized when the asset is sold after the mandated long term holding period has expired. LTCG tax rate is concessional and has exemptions built into it to reward long term patient capital.
LTCG & STCG Holding Periods, Tax Rates & Exemptions for Various Asset Classes
Depending on what asset class you are booking profits on, the minimum time for which the asset needs to be held in order to make it eligible for long term tax slab varies.
Listed Equity Shares & Equity Oriented Mutual Funds (STT Paid)
Holding Period for LTCG: More than 12 months.
STCG Tax Rate (Section 111A): 20% flat.
LTCG Tax Rate (Section 112A): 12.5% on gains above ₹1.25 Lakh tax exemption.
Indexation Benefit: Not applicable.
Real Estate & Immoveable Property (Land, House, Flat)
Holding Period for LTCG: More than 24 months.
STCG Tax Rate: Added to income and taxed at your applicable slab rates.
LTCG Tax Rate: 12.5% without indexation. (For properties acquired before July 23, 2024, resident individuals can evaluate between 12.5% without indexation or 20% with indexation and choose the option with lower tax liability).
Physical Gold, Sovereign Gold Bonds & Gold ETFs
Holding Period for LTCG: More than 24 months.
STCG Tax Rate: Taxed at your income tax slab.
LTCG Tax Rate: 12.5% flat without indexation.
Unspecified / Pure Debt Mutual Funds
On investments made on or after April 1, 2023, gains are treated as short term regardless of holding period and taxed at your marginal income tax slab.
Capital Gains Calculation Formula
The formula which is used to calculate the gains on the sale of any asset is as follows:
Where,
Full Value of Consideration: Total sale value received from disposing of the asset.
Cost of Acquisition: Purchase price paid to buy the asset.
Cost of Improvement: Cost of renovation or addition which permanently enhances the value of the asset (primarily applicable to real estate).
Transfer Expenses: Direct expenses incurred to complete the transaction (Brokerage, Stamp duty, Exchange turnover charges, Legal costs).
LTCG & STCG Calculation Examples
Example 1: LTCG on Equity Shares / Equity Mutual Funds
Suppose you invested ₹3,00,000 in a basket of listed shares/mutual funds and sold it 2 years later for ₹5,00,000.
Purchase Price: ₹3,00,000
Sale Price: ₹5,00,000
Holding Period: 24 months (> 12 months, hence LTCG)
Total Capital Gain: ₹5,00,000 - ₹3,00,000 = ₹2,00,000
Annual Exemption (Section 112A): ₹1,25,000
Net Taxable LTCG: ₹2,00,000 - ₹1,25,000 = ₹75,000
Tax Payable @ 12.5%: ₹75,000 × 12.5% = ₹9,375 (+ 4% Health & Education Cess = ₹9,750)
Example 2: STCG on Listed Stocks
Suppose you purchased shares for ₹1,50,000 and sold them 5 months later for ₹2,10,000.
Holding Period: 5 months (< 12 months, hence STCG)
Net Profit: ₹60,000
Tax Rate (Section 111A): 20%
Tax Payable: ₹60,000 × 20% = ₹12,000 (+ 4% Cess = ₹12,480)
Ways to Legally Reduce Capital Gains Tax Liability
1. Tax Loss Harvesting
Before the end of a fiscal year (March 31), you can sell off loss making stocks/funds to set off against realized capital gains. Short term capital losses can be set off against both STCG & LTCG, but long term losses can only be set off against LTCG.
2. Utilizing Annual Equity Exemption Limit
Every year capital gains made on equity up to ₹1.25 Lakh is completely tax free. By rebalancing your portfolio you can utilize the annual exemption limit to reset your cost basis.
3. Section 54 & 54F (Reinvestment in Real Estate)
If you are realizing LTCG by selling a residential house you can invest this money back into a residential house to claim exemption under Section 54 (upto ₹10 Crore investment threshold).
4. Section 54EC (Capital Gains Bonds)
By investing capital gains realized on sale of long term real estate into NHAI/REC Bonds (issued by government agencies) you can get tax exemption on up to ₹50 Lakh capital gains (with a 6 month lock in period).
LTCG & STCG FAQs
QWhat is the difference between LTCG and STCG?
Short Term Capital Gains (STCG) is the gain which is accrued by selling an asset after it has been held in the portfolio for a shorter duration (less than 12 months for listed equity, less than 24 months for real estate and gold). LTCG on the other hand is the gain which is accrued by selling an asset after it has been held in the portfolio for a longer duration (more than 12 months for listed equity, more than 24 months for real estate and gold). LTCG generally gets benefitted by lower flat tax rates.
QHow much long term equity gain is exempt from tax?
Long Term Capital Gains made on stock / equity mutual funds are exempt from tax up to ₹1.25 Lakh (Section 112A). Tax at 12.5% is payable on gains above this limit.
QCan capital losses be carried forward if not set off in the current year?
Yes. Both short term and long term capital losses can be carried forward for up to 8 consecutive assessment years provided the ITR is filed on or before the statutory due date.
QIs the basic exemption limit benefit available against capital gains?
For a resident individual taxpayer, if your regular income is below the slab where basic exemption limit kicks in, you can utilize the unutilized basic exemption limit against capital gains to reduce your tax liability.
QDoes indexation benefit still apply to real estate?
Indexation benefit for real estate has been discontinued effective July 23, 2024. For properties purchased on or after July 23, 2024 LTCG is taxed at 12.5%. For properties purchased before July 23, 2024, resident taxpayers have the option to calculate LTCG either at 20% (with indexation) or 12.5% (without indexation) and pay whichever amount is lower.