Capital Gains Tax: STCG vs LTCG for Shares & Property
When you sell an asset — shares, mutual funds, a house, or even gold — the profit you make is called a capital gain, and it is taxable. How much tax depends on two things: the type of asset and how long you held it. Get these two right and you can plan your sales to pay far less tax.
In this article
Holding periods matter
A capital gain is short-term if you held the asset for a short period, and long-term if you held it longer. The cut-off depends on the asset:
| Asset | Long-term threshold |
|---|---|
| Listed equity shares / equity mutual funds / ELSS | More than 12 months |
| Debt mutual funds | More than 24 months |
| Real estate (house, land) | More than 24 months |
| Gold / jewellery / unlisted shares | More than 36 months |
Short-term capital gains (STCG)
For listed equity shares and equity funds held 12 months or less, STCG is taxed at a flat 20%. For debt funds and most other assets held short-term, the gain is added to your income and taxed at your slab rate.
Long-term capital gains (LTCG)
Long-term gains on listed equity shares and equity funds above ₹1,25,000 in a financial year are taxed at 12.5%. The first ₹1,25,000 of LTCG on these assets is tax-free each year — a real benefit for investors.
Long-term gains on property are taxed at 12.5% without indexation. Long-term gains on debt funds held over 24 months are taxed at your slab rate. Gold and other assets held over 36 months follow the same 12.5% rule as property.
| Asset type | STCG rate | LTCG rate |
|---|---|---|
| Listed equity shares & equity funds | 20% | 12.5% (over ₹1.25L free) |
| Real estate | Slab rate | 12.5% |
| Debt funds | Slab rate | Slab rate |
| Gold / jewellery | Slab rate | 12.5% (over 36 months) |
Capital gains on property
Selling a house is where most people first meet capital gains tax. If you sell a property after holding it for more than 24 months, the profit is a long-term capital gain taxed at 12.5%. If sold within 24 months, the gain is added to your income and taxed at your slab rate — often far more expensive.
Exemptions under Sections 54, 54F, 54EC
The tax law is generous with reinvestment exemptions for property sales:
- Section 54: If you buy or construct a new residential house within the prescribed time, the LTCG is exempt up to the amount reinvested.
- Section 54F: If you sell an asset other than a house (like shares or gold) and invest the entire sale proceeds in a residential house, the gain can be fully exempt.
- Section 54EC: Investing the gain within 6 months in specified bonds (like NHAI/REC, now cap ₹60 lakh) exempts the gain.
Watch the timelines: Section 54/54F exemptions are revoked if you buy another residential house within the next two years or sell the new house within three. Plan carefully.
Worked example
Meera bought ₹5,00,000 of equity shares in 2023 and sold them in 2025 for ₹8,00,000. She held them for more than 12 months, so the ₹3,00,000 gain is LTCG. After the ₹1,25,000 exemption, ₹1,75,000 is taxable at 12.5% — about ₹21,875 in tax. Had she sold within a year, the same gain would have attracted 20% STCG of ₹60,000.
Just by waiting a little longer, Meera saved roughly ₹38,000.
Related: Explore the capital gains flow in our residential status flowchart or compare regimes that change your overall tax bill in New vs Old Regime.