Capital Gain Tax Calculation for FY 2024-25 and FY 2025-26
Capital Gain Tax Calculation for FY 2024-25 and FY 2025-26 Capital gains tax is an important aspect of taxation in India, impacting individuals and businesses that earn profits from the sale of assets such as stocks, real estate, and mutual funds. This blog will provide a detailed guide on the calculation of Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG) for the financial years (FY) 2024-25 and 2025-26, including recent tax rate changes and their implications.
For Better Understanding Watch this video – https://youtu.be/MFjMryoQCcI
What is Capital Gain?
Capital gain refers to the profit earned from selling a capital asset. Depending on the holding period of the asset, the capital gain is classified as either Short-Term Capital Gain (STCG) or Long-Term Capital Gain (LTCG).
- Short-Term Capital Gain (STCG): Capital Gain Tax Calculation for FY 2024-25 and FY 2025-26 If an asset is held for a short duration and then sold, the profit is classified as STCG. Capital Gain Tax Calculation for FY 2024-25 and FY 2025-26
- Long-Term Capital Gain (LTCG): Capital Gain Tax Calculation for FY 2024-25 and FY 2025-26 If an asset is held for a longer period before being sold, the profit is classified as LTCG.
The tax treatment of STCG and LTCG varies based on the type of asset and the applicable tax laws.
Short-Term Capital Gain (STCG) Tax Calculation
Definition of Short-Term Capital Gain
STCG is applicable when a capital asset is sold within a short period. The holding period for STCG varies for different asset classes:
- Equity shares and equity-oriented mutual funds: Sold within 12 months of acquisition.
- Immovable properties (real estate): Sold within 24 months of acquisition.
- Debt mutual funds, gold, unlisted shares: Sold within 36 months of acquisition.
STCG Tax Rates for FY 2024-25 and FY 2025-26
| Asset Type | Holding Period | Tax Rate |
| Listed Equity Shares & Equity-Oriented Mutual Funds | < 12 months | 20% (Revised from 15%) |
| Other Assets (Real Estate, Gold, Debt Mutual Funds, etc.) | < 24 or 36 months | As per income tax slab |
Formula to Calculate STCG
STCG = Sale Price – (Purchase Price + Improvement Cost + Transfer Expenses)
Example of STCG Calculation:
- You purchase shares for ₹1,00,000 in January 2024 and sell them for ₹1,20,000 in June 2024.
- Capital Gain: ₹20,000
- Tax (20% on ₹20,000): ₹4,000
For non-equity assets, STCG is added to the total income and taxed according to the applicable slab rates.
Long-Term Capital Gain (LTCG) Tax Calculation
Definition of Long-Term Capital Gain
LTCG applies when a capital asset is held for a longer period before being sold:
- Equity shares and equity-oriented mutual funds: Capital Gain Tax Calculation for FY 2024-25 and FY 2025-26 Held for more than 12 months.
- Immovable properties (real estate): Capital Gain Tax Calculation for FY 2024-25 and FY 2025-26 Held for more than 24 months.
- Debt mutual funds, gold, unlisted shares: Held for more than 36 months.
LTCG Tax Rates for FY 2024-25 and FY 2025-26
| Asset Type | Holding Period | Tax Rate |
| Listed Equity Shares & Equity-Oriented Mutual Funds | > 12 months | 12.5% (Revised) |
| Other Assets (Real Estate, Gold, Debt Mutual Funds, etc.) | > 24 or 36 months | 12.5% (Revised) |
Formula to Calculate LTCG
LTCG = Sale Price – (Indexed Purchase Price + Improvement Cost + Transfer Expenses)
Note: From FY 2024-25, indexation benefits are no longer applicable for most assets.
Example of LTCG Calculation:
- You purchase a property for ₹5,00,000 in January 2022 and sell it for ₹8,00,000 in August 2024.
- Capital Gain: ₹3,00,000
- Tax (12.5% on ₹3,00,000): ₹37,500
Key Changes in Capital Gains Tax for FY 2024-25 and FY 2025-26
- STCG on Equity Shares & Equity-Oriented Mutual Funds Increased to 20% (from 15%).
- Uniform LTCG Tax Rate of 12.5% for All Asset Classes.
- Indexation Benefit Removed for Most Assets.
How to Save Capital Gains Tax?
Exemptions Under Sections 54 and 54F (For Real Estate)
- Section 54: LTCG from property sales can be reinvested in another residential property to claim exemption.
- Section 54F: LTCG from other assets (except residential property) can be reinvested in a residential property to get exemption.
Exemption Under Section 54EC
- LTCG from real estate sales can be invested in specified bonds (NHAI/REC) within six months to claim exemption (up to ₹50 lakh).
Tax-Free LTCG for Equity Investments
- LTCG up to ₹1,00,000 from equity shares and equity mutual funds is exempt from tax under Section 112A.
Conclusion
Understanding capital gains tax is crucial for effective financial planning. The recent changes in tax rates for STCG and LTCG impact how profits from asset sales are taxed. Taxpayers should plan their investments and sales strategically to optimize their tax liability. Capital Gain Tax Calculation for FY 2024-25 and FY 2025-26 Consulting a tax professional can help in making informed decisions regarding tax-saving investments and exemptions.
By following these guidelines, you can ensure that you comply with capital gains tax regulations while maximizing your tax savings!
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