Capital Gain Tax Calculations: Capital is a profit earned from the sale of a capital asset. The asset can be equity (stocks and mutual funds), jewellery, a building, land or a virtual asset such as cryptocurrency. While long term capital gain (LTCG) for most assets are taxed at a 12.5 per cent without the benefit of indexation, rules for short term capital gains (STCG) vary.
They are mostly taxed at slab rates.
Investors also get Rs 1,25,000 tax exemption on LTCG earned by selling listed equity shares or equity-oriented mutual funds.
On the other hand, STCG on listed shares or equity-oriented mutual funds is 20 per cent.
Know more about capital gain tax applicable on various assets and the estimated tax one needs to pay on Rs 5 lakh capital gain from equity and debt funds, real estate and gold jewellery.
Short term capital gain (STCG) tax
STCG tax is applied on gains from assets held for less than 24 months. However, if assets are equity, securities (such as bonds, government securities listed in a recognised security exchange), zero-coupon bonds and units of UTI, STCG is applied for holding them for less than 12 months.
Long term capital gain (LTCG) tax
LTCG tax is applied on assets sold after holding them for more than 24 months. Such assets can be land, buildings, and house property.
However, it will be applied for assets held for more than 12 months if such assets are equity shares, securities, units of UTI and units of equity-oriented mutual funds.
Let’s see tax rates on different assets.
Listed equity shares and equity-oriented mutual funds
LTCG is applied at 12.5 per cent over and above Rs 1.25 lakh gains.
STCG is applied at a 20 per cent rate on gains.
For equity-oriented mutual funds acquired on or before April 1, 2023
LTCG will be applied at 10 per cent over and above Rs 1 lakh gains.
STCG is applied at a 15 per cent rate.
On debt mutual funds (acquired on or before April 1, 2023)
STCG will be applied at tax slab rates.
On the other hand, LTCG will be at a 20 per cent rate with indexation.
On debt mutual funds (acquired on or after April 1, 2023)
STCG and LTCG will both be taxed at an individual’s slab rates.
Tax on gains from sale of land, building, or both
For individuals and Hindu Undivided Families (HUF)
STCG will be 20 per cent.
LTCG will be 12.5 per cent without indexation and 20 per cent with indexation.
On gold
STCG will be applicable at an individual’s income tax slab if gold is held for less than 36 months.
LTCG will be 20 per cent with indexation if gold is held for more than 36 months.
Calculations for story
We will calculate the estimated income tax you need to pay on Rs 5 lakh capital gains from equity-oriented mutual funds, debt funds, property, and gold (assuming this is not the gainer’s only income.)
LTCG tax on equity-oriented mutual fund investment gains (acquired on or before April 1, 2023)
Rs 40,000 after a Rs 1 lakh exemption and 10 per cent on the rest of the amount.
LTCG tax on equity-oriented mutual fund investment gains (acquired on or before April 1, 2023)
Rs 46,875 after a Rs 1,25,000 tax exemption and 12.5 per cent tax on the rest of the amount.
Income tax on gains from debt mutual funds (acquired on or after April 1, 2023)
Since the holding duration is less than 36 months, STCG will apply on these gains. The tax will apply at slab rates. Let’s see what it can be at different rates.
| Slab rate | Income tax |
| 5% | ₹ 25,000 |
| 10% | ₹ 50,000 |
| 15% | ₹ 75,000 |
| 20% | ₹ 1,00,000 |
| 25% | ₹ 1,25,000 |
| 30% | ₹ 1,50,000 |
Income tax on gold held for less than 3 years
It will be taxed at slab rates. The income tax paid will be as follows:
| Slab rate | Income tax |
| 5% | ₹ 25,000 |
| 10% | ₹ 50,000 |
| 15% | ₹ 75,000 |
| 20% | ₹ 1,00,000 |
| 25% | ₹ 1,25,000 |
| 30% | ₹ 1,50,000 |
LTCG tax on land sale
We are calculating at a 12.5 per cent rate without the benefit of indexation.
At that rate, the estimated income tax will be Rs 62,500.
(Disclaimer: These rates are estimated. Actual tax amount may vary.)