Archive · 5 Aug 2025
India's Capital Gains Tax Changes: What Investors Need to Know
The government made changes to how taxes are calculated on investments sold at a profit.
For long-term investments, the tax rate is now lower, at 12.5%.
Before, you could adjust the cost of the investment for inflation, but this was removed.
However, if you bought your investment before the rule change, you can choose to use the old rules or the new ones.
For investments sold in a short time, the tax rate went up.
You will want to understand these changes when filing taxes.
Budget 2024-25, presented on July 23, 2024, included changes to long-term capital gains tax.
Long-term capital gains tax rate was lowered to 12.5% from 20%.
Indexation, allowing adjustments for inflation, was phased out but restored for assets bought before July 23, 2024.
Taxpayers can choose between 12.5% tax without indexation or 20% with indexation for assets acquired before July 23.
Short-term gains on financial assets now have a 20% tax rate, up from 15%.
- Who
- Affects taxpayers and investors.
- What
- Changes to long-term and short-term capital gains tax.
- When
- Announced July 23, 2024.
- Where
- India.
- Why
- To reform and update the tax system.
Taxpayers with assets sold before July 23, 2024
Taxpayers with assets sold after July 23, 2024
Tax Calculation
Taxpayers with assets sold before July 23, 2024
May prefer indexation to reduce tax liability
Taxpayers with assets sold after July 23, 2024
May choose lower tax rate of 12.5% without indexation
- Effective Date of Changes
- July 23, 2024
- Old LTCG Tax Rate
- 20%
- New LTCG Tax Rate
- 12.5%
- Short-term Gains Tax Rate (New)
- 20%
- Old Short-term Gains Tax Rate
- 15%
- Indexation
- Phased out, but restored for assets bought before July 23, 2024
- Exemption Limit for listed assets
- ₹1.25 lakh
