Capital Gains Tax Summary (India)

Created by CA Yogesh Kumawat


📊 Capital Gains Tax Summary (For the transfers happened on or after 23 July 2024, tax on Capital Gains as per New Regime are to be taxed as follows)

Tax Type

Asset/Condition

Applicable Tax Rate

Long-Term Capital Gains (LTCG)

Listed equity shares (STT paid on purchase and sale)

12.5% on gains exceeding ₹1.25 lakh

Units of equity-oriented mutual funds (STT paid on sale)

Land or Building or Both — Individuals/HUFs

12.5% without indexation or 

20% with indexation (whichever is beneficial)

Land or Building or Both — Other persons

12.5% without indexation

Other LTCG assets

12.5%

Short-Term Capital Gains (STCG)

When STT is not applicable

Taxed as per normal income slab rates

When STT is applicable

20%

Note: Basic Exemption is allowed in all the cases (New Regime)(Rs.400,000)  Sec 115BAC

Note: Cannot claim any deductions of Chapter-VIA except in STCG where normal income slab rates applies.

🏠Sale of Residential Property (House Property / Land for house)

  • Section 54 → Exemption if LTCG from sale of residential house property is reinvested in another residential house in India.

    • Eligible: Individuals / HUFs

    • Time: Buy 1 year before / 2 years after, or construct within 3 years

    • How much to invest to exempt entire LTCG: LTCG amount

    • Max Exemption: Lower of LTCG or new investment

    • Exemption withdrawn if new house sold within 3 years + Unutilized CGAS Funds

  • Section 54EC → Exemption if LTCG from sale of land/building (residential or other) is invested in NHAI/REC specified bonds.

    • Eligible: Any assessee

    • Time: Within 6 months of transfer

    • How much to invest to exempt entire LTCG: LTCG amount

    • Max Exemption: ₹50 lakh per financial year

    • Lock-in: within 5 years sold or 3 years conversion (if bonds sold/converted earlier → exemption withdrawn)

  • Section 54EE → Exemption if LTCG from any long-term capital asset is invested in Units of Notified funds.

    • Eligible: Any assessee

    • Time: Within 6 months of transfer

    • How much to invest to exempt entire LTCG: LTCG amount

    • Max Exemption: ₹50 lakh per financial year

    • Lock-in: within 3 years sold (withdrawal before 3 years → exemption withdrawn)

  • Section 54GB → Exemption if LTCG from sale of residential property (house/plot) is invested in equity shares of eligible startup/SME, and company uses it for new assets.

    • Eligible: Individuals / HUFs

    • Time: Before due date of ITR filing

    • How much to invest to exempt entire LTCG: LTCG amount

    • Exemption: Proportionate (cost of investment ÷ net consideration × LTCG)

    • Lock-in: 5 years for shares, exemption withdrawn if shares sold earlier or company misuses funds

🏭 Sale of Industrial / Business Property

  • Section 54D → Exemption if land/building of an industrial undertaking is compulsorily acquired and new land/building is purchased for re-establishing industrial undertaking.

    • Eligible: Any assessee

    • Time: Invest within 3 years of compulsory acquisition

    • How much to invest to exempt entire LTCG: LTCG amount

    • Max Exemption: Lower of LTCG or new investment

    • Exemption withdrawn if new asset sold within 3 years

  • Section 54G / 54GA → Exemption if an industrial undertaking is shifted (from urban to non-urban area or to SEZ) and capital gain is reinvested in new plant/machinery/land/building.

    • Eligible: Any assessee

    • Time: Within 1 year before / 3 years after transfer

    • How much to invest to exempt entire LTCG: LTCG amount

    • Exemption: Lower of capital gain or new investment

  • Section 54EC → Exemption if LTCG from sale of land/building (residential or other) is invested in NHAI/REC specified bonds.

    • Eligible: Any assessee

    • Time: Within 6 months of transfer

    • How much to invest to exempt entire LTCG: LTCG amount

    • Max Exemption: ₹50 lakh per financial year

    • Lock-in: within 5 years sold or 3 years conversion (if bonds sold/converted earlier → exemption withdrawn)

  • Section 54EE → Exemption if LTCG from any long-term capital asset is invested in Units of Notified funds.

    • Eligible: Any assessee

    • Time: Within 6 months of transfer

    • How much to invest to exempt entire LTCG: LTCG amount

    • Max Exemption: ₹50 lakh per financial year

    • Lock-in: within 3 years sold (withdrawal before 3 years → exemption withdrawn)

  • Section 54F → Exemption if LTCG from sale of any capital asset (except residential property) is invested in one residential house in India.

    • Eligible: Individuals / HUFs

    • How much to invest to exempt entire LTCG: Entire Sale Consideration amount

    • Proportionate exemption if partly invested (cost of new asset * LTCG / sale consideration)

    • Similar timelines & CGAS rules as Sec 54

    • “Sec 54F applies to sale of any long-term capital asset (except residential house) – whether commercial property, industrial land, agricultural land (urban), gold, shares, etc.”

🌾 Urban Agricultural Property (Rural agri land is fully exempt from capital gains)

  • Section 54B → Exemption if LTCG/STCG from sale of urban agricultural land (used for agriculture in last 2 years) is reinvested in new agricultural land.

    • Eligible: Individuals / HUFs

    • Time: Within 2 years from date of transfer

    • How much to invest to exempt entire CG: CG amount

    • Limit: Lower of capital gain or investment in new agri land (+ CGAS allowed)

    • Exemption withdrawn if new land sold within 3 years

  • Section 54EC → Exemption if LTCG from sale of land/building (residential or other) is invested in NHAI/REC specified bonds.

    • Eligible: Any assessee

    • Time: Within 6 months of transfer

    • How much to invest to exempt entire LTCG: LTCG amount

    • Max Exemption: ₹50 lakh per financial year

    • Lock-in: within 5 years sold or 3 years conversion (if bonds sold/converted earlier → exemption withdrawn)

  • Section 54EE → Exemption if LTCG from any long-term capital asset is invested in Units of Notified funds.

    • Eligible: Any assessee

    • Time: Within 6 months of transfer

    • How much to invest to exempt entire LTCG: LTCG amount

    • Max Exemption: ₹50 lakh per financial year

    • Lock-in: within 3 years sold (withdrawal before 3 years → exemption withdrawn)

  • Section 54F → Exemption if LTCG from sale of any capital asset (except residential property) is invested in one residential house in India.

    • Eligible: Individuals / HUFs

    • How much to invest to exempt entire LTCG: Entire Sale Consideration amount

    • Proportionate exemption if partly invested (cost of new asset * LTCG / sale consideration)

    • Similar timelines & CGAS rules as Sec 54

    • “Sec 54F applies to sale of any long-term capital asset (except residential house) – whether commercial property, industrial land, agricultural land (urban), gold, shares, etc.”


Common Exemption Sections:-
Sec 54EC: common to all land/building assets

54F: common to all non-residential LTCAs

Note: Time limit to deposit in CGAS: On or before due date of Income tax.