What Budget 2024 Changed for Capital Gains: New STCG 20% & LTCG 12.5% Rates

The Finance (No. 2) Act, 2024 rewired how capital gains are taxed in India — raising equity rates, removing indexation, and harmonising holding periods across asset classes. If you sold anything in the second half of FY 2024-25, or you're planning trades for FY 2025-26, the rules that apply are the ones below.

This explainer covers exactly what changed and when: the new STCG and LTCG rates, the indexation rollback (and the property carve-out that survived it), the new 12-and-24-month holding-period map, and the 23 July 2024 pivot that split FY 2024-25 into two rate regimes.

Reading time: ~9 minutes. For the cash impact in one screen, jump to the worked example.

What Changed, at a Glance

The stated goal of the Finance (No. 2) Act, 2024 was simplification — harmonising holding periods and standardising rates across asset classes — but the immediate result was a tax hike for equity investors.

Here is the exact before-and-after for equity investments:

STCG: The Jump to 20%

Under Section 111A, Short-Term Capital Gains on listed equity shares and equity mutual funds (where Securities Transaction Tax is paid) saw a straight 500-basis-point hike, moving from a flat 15% to a flat 20%.

For active market participants and short-term swing traders, this directly compresses post-tax returns and demands stricter risk-to-reward ratios on short-term positions.

LTCG: The 12.5% Reality

Under Section 112A, the tax on Long-Term Capital Gains for equities increased from 10% to 12.5%.

To cushion the blow for retail investors, the government expanded the annual tax-free threshold. The amount of LTCG you can realise before paying any tax increased from ₹1 Lakh to ₹1.25 Lakh per financial year.

For a tactical guide on exploiting this new limit, read our ₹1.25 lakh exemption harvesting guide.

The End of Indexation

For non-equity assets (real estate, gold, unlisted shares), the budget introduced a flat 12.5% LTCG rate. However, this came at the cost of indexation — the mechanism that let investors adjust their purchase price for inflation before calculating tax.

The property carve-out: following significant pushback, a grandfathering amendment was rolled out for real estate. If you are a resident individual or HUF who purchased land or buildings before 23 July 2024, you have a choice — pay 12.5% without indexation or 20% with indexation, whichever results in the lower tax. For all properties bought on or after 23 July 2024, the flat 12.5% (no indexation) applies universally.

Holding-Period Harmonisation

Previously, deciding whether an asset was short-term or long-term meant navigating a maze of 12-month, 24-month, and 36-month rules. The 36-month bucket has been eliminated to simplify compliance.

The 23 July 2024 Split-Year

Because the budget was presented midway through the year, FY 2024-25 operated under two distinct rate regimes. The pivot date was 23 July 2024.

If you sold shares in May 2024 and again in August 2024, those identical assets were taxed at different rates within the same financial year.

What This Means for FY 2025-26

The complexity of the split-year is behind us. For FY 2025-26 (and onward, barring future amendments), we are in a clean, uniform-rate environment. Every equity trade you execute this year is governed strictly by the 20% STCG and 12.5% LTCG rules.

VriddhiQ isolates data by financial year and applies the correct statutory rates from its per-FY tax configuration — so your dashboard always reflects the rules in force for that specific year, including the 23 July 2024 changeover.

Worked Example: The Tax Impact

Here is the cash impact of the rate change on a ₹3,00,000 Long-Term Capital Gain.

Despite the higher ₹1.25L exemption, the 2.5-percentage-point rate increase means you ultimately pay more tax on gains of this size under the new regime. (Both figures are before the 4% Health & Education cess.)

Frequently Asked Questions

Did the STCG rate change for all assets?

No. The hike to 20% strictly applies to listed equity shares and equity-oriented mutual funds under Section 111A. Short-term gains on other assets (like property or gold) continue to be taxed at your applicable income-tax slab rate.

Is indexation completely gone?

For all assets purchased on or after 23 July 2024, yes. The only exception is resident individuals and HUFs selling real estate acquired before that date, who can still choose the 20%-with-indexation option.

How are debt mutual funds taxed now?

Debt mutual funds purchased on or after 1 April 2023 are always classified as short-term, regardless of holding period, and taxed at your applicable income-tax slab rate.

Does the ₹1.25L exemption apply to minors?

Yes, but under Section 64(1A) a minor's capital gains are clubbed with the income of the parent who earns more. The minor's gains therefore consume the parent's single ₹1.25L limit rather than getting their own. See our guide on Family Multi-PAN strategies.

What is the deadline to book losses under the new rates?

Tax-loss harvesting must be completed by the end of the financial year. For exact dates and strategy, see our tax-loss harvesting calendar.

Further reading

• The ₹1.25 lakh LTCG exemption — book equity gains tax-free
• The tax-loss harvesting calendar FY 2025-26 — when to book losses and gains
• Section 64(1A) minor income clubbing — how a minor's gains are taxed

This article reflects rules as of FY 2025-26 (Finance (No. 2) Act, 2024 amendments). Tax laws change yearly — always confirm with your CA or the income-tax portal before filing.