Capital Gains Under the Income-tax Act 2025

For listed equity, short-term capital gains are taxed at 20% where the holding period is 12 months or less, and long-term gains at 12.5% with an annual exemption of ₹1.25 lakh. Unlisted shares carry a 24-month holding period, with short-term gains taxed at slab rates and long-term gains at 12.5%.

The current position

The ₹1.25 lakh exemption applies annually to qualifying long-term gains on listed equity where securities transaction tax has been paid on a recognised exchange.

Two changes to track separately

Practitioners should treat the renumbering and the rate changes as separate exercises. The capital gains provisions moved position in the statute under the 2025 Act, and separately, rates and holding periods were revised in recent Finance Acts. A mapping table tells you where a provision now sits, not what it now says.

The move toward a more uniform 12.5% long-term rate across asset classes, and toward standardised holding periods, is the substantive direction. Indexation was withdrawn as part of that change, but immovable property carries specific transitional relief.

The election on immovable property. A resident individual or HUF transferring land or building acquired before 23 July 2024 may compute long-term capital gains under either method and pay the lower amount: 12.5% without indexation, or 20% with indexation. The relief was introduced by the Finance (No. 2) Act, 2024. It does not extend to non-residents, companies or LLPs, and it does not apply to property acquired on or after 23 July 2024, where the 12.5% rate without indexation applies.

For any long-held property this election is worth modelling both ways rather than assumed, because which side wins depends on the holding period and the actual rate of appreciation relative to the Cost Inflation Index.

What to check on a live transaction

Confirm the holding period against the current provision rather than from memory, because uniformity changes are exactly the kind of amendment that catches experienced practitioners.

Establish the acquisition date and cost precisely, particularly for assets acquired before any grandfathering cut-off.

Check whether an election between computation methods is available, and model both.

Confirm exemption caps and reinvestment windows before committing a client to a reinvestment plan.

Related reading

• the 2025 Act overview — Income-tax Act, 2025 vs the 1961 Act: What Actually Changed
• ESOP taxation on sale — ESOP Taxation for Startups in India: Timing and Valuation
• exit structuring for PE-backed companies — Exit Structuring for PE-Backed Indian Companies

Sources

• Capital gains provisions, Income-tax Act, 2025 read with the applicable Finance Act — incometax.gov.in