If you sold equity shares, redeemed mutual funds, sold property, or exited any investment during FY 2025–26, you have capital gains to report — and for AY 2026–27, the rules are materially different from prior years. Budget 2024 overhauled capital gains taxation with effect from July 23, 2024: the STCG rate on listed equity jumped from 15% to 20%, the LTCG rate on listed equity rose from 10% to 12.5%, the LTCG exemption limit increased from ₹1 lakh to ₹1.25 lakh, and indexation was removed for most asset classes. For AY 2026–27 (FY 2025–26), these new rates apply to the full financial year without any mid-year split. Getting Schedule CG right in your ITR is critical — errors here are one of the most common triggers of tax notices and demand orders. As a CA in Mumbai handling individual ITR filing for investors, traders, and business owners, this guide covers every asset class in detail.
Capital Gains Tax Rates Quick Reference — AY 2026–27
| Asset Class | Holding Period for LTCG | STCG Rate | LTCG Rate | Section |
|---|---|---|---|---|
| Listed equity shares | > 12 months | 20% | 12.5% (above ₹1.25L) | 111A / 112A |
| Equity mutual funds (≥65% equity) | > 12 months | 20% | 12.5% (above ₹1.25L) | 111A / 112A |
| Debt mutual funds (purchased after 1 Apr 2023) | Any period | Slab rates (no LTCG benefit) | 50AA | |
| Debt mutual funds (purchased before 1 Apr 2023) | > 36 months | Slab rates | 12.5% (no indexation) | 112 |
| Hybrid / Balanced Advantage Funds (<65% equity) | > 24 months | Slab rates | 12.5% (no indexation) | 112 |
| Immovable property (land / building) | > 24 months | Slab rates | 12.5% (no indexation)* | 112 |
| Gold, sovereign gold bonds (physical / paper) | > 24 months | Slab rates | 12.5% (no indexation) | 112 |
| Unlisted shares | > 24 months | Slab rates | 12.5% (no indexation) | 112 |
| Crypto / VDA (Virtual Digital Assets) | Any period | 30% flat (no deduction except cost of acquisition) | 115BBH | |
* Property purchased before July 23, 2024 — taxpayer may opt for 20% with indexation if it results in lower tax. This option is available only for property, not other asset classes.
Asset-Class Deep Dives
Listed Equity Shares & Equity Mutual Funds (Section 112A / 111A)
STCG: 20%LTCG: 12.5% above ₹1.25L
For FY 2025–26, equity shares and equity mutual funds held for more than 12 months qualify as long-term. The LTCG exemption limit is ₹1,25,000 per year — gains up to this amount are tax-free; gains above it are taxed at 12.5% with no indexation.
Grandfathering (for shares/units purchased before Feb 1, 2018): The cost of acquisition is the higher of actual purchase price or the fair market value (FMV) as of January 31, 2018 (closing price on NSE/BSE). This grandfathering provision was introduced when LTCG was reintroduced in Budget 2018 and continues to apply. Most broker capital gain statements automatically apply this — always verify.
SIP redemptions: Each SIP installment is treated as a separate purchase. A SIP started in January 2024 redeemed in February 2025 is STCG (12 months not completed). The same SIP units redeemed in February 2026 are LTCG. Mutual fund houses provide a detailed FIFO-based capital gain statement from CAMS / KFintech — use this, not your own calculation.
STCG set-off: STCG under Section 111A can be set off against STCG from other assets (not LTCG or business income). Unabsorbed STCG can be carried forward for 8 years but only if the original return was filed by July 31, 2026.
Immovable Property — Land & Buildings
STCG: Slab ratesLTCG: 12.5% without indexation
Property held for more than 24 months (from date of purchase/registration) qualifies as long-term for AY 2026–27. Budget 2024 removed indexation for properties, but introduced a grandfathering option for properties purchased before July 23, 2024: you may choose between 12.5% without indexation OR 20% with indexation — whichever results in lower tax. This is a one-time option available only for this transition period.
Cost of acquisition for old property: For property purchased before April 1, 2001, the cost is the higher of actual cost or FMV as of April 1, 2001 (municipal valuation or registered valuer's report). Stamp duty, registration charges, brokerage paid at the time of purchase, and cost of improvement (renovation) are all included in the cost of acquisition.
Section 54 exemption: LTCG on residential property is exempt if you purchase one new residential property within 1 year before or 2 years after the sale date, or construct within 3 years. The exemption is capped at ₹10 crore from AY 2024–25 onwards.
Section 54EC exemption: Invest LTCG (up to ₹50 lakh) in NHAI / REC bonds within 6 months of the sale to claim exemption. The bonds have a 5-year lock-in.
TDS by buyer: If the property sale value exceeds ₹50 lakh, the buyer must deduct TDS at 1% under Section 194-IA and deposit it. Verify this appears in your Form 26AS and claim it in Schedule TDS of your ITR.
Debt Mutual Funds
Purchased after Apr 1, 2023: Slab rates (any holding period)
Debt mutual funds (equity allocation below 65%) purchased after April 1, 2023 are taxed at slab rates regardless of holding period — they have no LTCG benefit. This was a major change from Budget 2023. For AY 2026–27, report redemptions of such funds in Schedule OS (Other Sources) under "Income from other sources", not in Schedule CG.
Debt funds purchased before April 1, 2023 and held for more than 36 months still qualify for LTCG at 12.5% (without indexation, per Budget 2024 changes). Report these in Schedule CG under Section 112.
Crypto / Virtual Digital Assets (VDA)
30% flat — any holding period
All crypto transactions — Bitcoin, Ethereum, NFTs, gaming tokens — are taxed at a flat 30% under Section 115BBH. The only deduction allowed is the cost of acquisition. No other expenses (exchange fees, wallet charges, gas fees) are deductible. Losses from VDA transactions cannot be set off against any other income — not even other VDA gains in the same year. Each transaction is a separate taxable event.
TDS under Section 194S: Indian crypto exchanges deduct TDS at 1% on every sell/transfer. This appears in your Form 26AS and AIS. Claim it in Schedule TDS. If you used a foreign exchange (Binance, Kraken etc.), no TDS is deducted — you must self-compute and pay advance tax.
Schedule VDA in ITR: Fill the date of acquisition, date of transfer, cost of acquisition, and full value of consideration for each VDA transaction. Most exchanges provide downloadable transaction history — use the CSV export.
"Capital gains is the one area where a wrong entry in your ITR can simultaneously result in a demand notice AND a wrong refund claim. Get the rates, holding periods, and section numbers right — or have a CA handle it."
Set-Off and Carry-Forward Rules for Capital Losses
| Type of Loss | Can Be Set Off Against | Carry Forward |
|---|---|---|
| Short-term capital loss (any asset) | STCG or LTCG (any asset) | 8 years — only if ITR filed by due date |
| Long-term capital loss (equity, property, etc.) | LTCG only (cannot set off against STCG) | 8 years — only if ITR filed by due date |
| VDA / Crypto loss | Cannot be set off against any income, including other VDA gains | Cannot be carried forward |
| Speculative loss (intraday equity trading) | Speculative income only | 4 years — only if ITR filed by due date |
How to Fill Schedule CG in ITR-2 / ITR-3
Schedule CG is one of the most detailed schedules in the ITR. Here is the correct filing approach for each asset class:
- Listed equity STCG (Section 111A): Enter in "STCG taxable at special rates" → 20% column. Source: broker capital gain statement.
- Listed equity / equity MF LTCG (Section 112A): Enter scrip-wise or MF-wise details in the dedicated Section 112A table. The portal auto-computes tax on gains above ₹1.25 lakh at 12.5%.
- Property / gold / unlisted shares LTCG (Section 112): Enter in "LTCG" section → 12.5% without indexation. For pre-July 2024 property, enter both calculations (with and without indexation) and select the favourable option.
- Debt mutual funds (post-Apr 2023): Do NOT enter in Schedule CG. Enter in Schedule OS as "Income from other sources".
- VDA / Crypto: Fill Schedule VDA separately. The ITR auto-transfers VDA tax to the final tax computation at 30%.
- Set-off of losses: Fill Schedule CYLA (Current Year Loss Adjustment) and Schedule BFLA (Brought Forward Loss Adjustment) to claim loss set-offs.
Capital Gains ITR Filing — Done Right by a CA
Our CA team in Mumbai reconciles your broker statements, MF redemptions, property sale documents, and crypto transaction history before accurately filing Schedule CG in your ITR — maximising exemptions and minimising notices.
Book a Free ConsultationAdvance Tax on Capital Gains — Do You Owe Interest?
If you sold property, redeemed large MF holdings, or had significant equity LTCG during FY 2025–26, you may have had an obligation to pay advance tax by June 15, September 15, December 15, or March 15 of that year. If you did not pay advance tax on time and your final tax liability (after TDS) exceeds ₹10,000, you owe interest:
- Section 234B: 1% per month interest on unpaid tax from April 1, 2026 to the date of filing your ITR — applicable if you paid less than 90% of your total tax liability as advance tax.
- Section 234C: 1% per month interest for deferment of each instalment of advance tax (June, September, December, March).
Capital gains from property and other assets where the exact gain is known only after the transaction can be paid as advance tax in the remaining instalments after the transaction without Section 234C interest — but Section 234B still applies if total advance tax paid is less than 90%.
Conclusion
For AY 2026–27, capital gains tax is governed by the post-Budget 2024 rates — STCG at 20% on listed equity, LTCG at 12.5% with a ₹1.25 lakh exemption, no indexation for most assets, and a grandfathering option for property purchased before July 23, 2024. Correctly classifying each asset, applying the right holding period, filling Schedule CG and VDA accurately, and carrying forward losses only if you file by July 31, 2026 are the key steps. If you file ITR online yourself, download your broker's capital gain statement, CAMS/KFintech statement, and crypto exchange history before starting. For complex portfolios involving property, unlisted shares, or VDAs, engaging a CA in Mumbai ensures the correct rates, correct sections, and maximum exemptions are applied. Reach out to KC Shah & Associates for individual ITR filing support this season.
Written by CA Karan Shah
Founder of KC Shah & Associates. With over 5 years of experience in income tax, GST, and virtual CFO services, Karan helps startups and SMEs across India achieve financial clarity and stay audit-ready.