Capital Gains Tax on Shares & Property: LTCG vs STCG
By the QuickYield Team · Published August 24, 2026 · Updated September 16, 2026 · 7 min read
How much tax do you pay on ₹3 lakh of equity gains? If you held the shares for over a year (long-term), it’s ₹22,750 (including 4% cess) — after a ₹1.25 lakh annual exemption, taxed at 12.5%. If you held for under a year (short-term), there’s no exemption and the rate is higher: ₹20,800 tax on a comparable ₹1 lakh short-term gain.
Long-term vs short-term: the holding period is everything
For listed equity and equity mutual funds, holding for 12 months or more makes a gain long-term (LTCG); under 12 months, it’s short-term (STCG). For property and most other assets, the threshold is longer — 24 months. This single distinction changes both your tax rate and whether an exemption applies, so knowing your exact holding period (not just roughly) matters.
The rates and exemptions, by asset type
| Asset | Short-term | Long-term |
|---|---|---|
| Listed equity / equity mutual funds | 20%, no exemption | 12.5%, after ₹1.25L/year exemption |
| Property / other assets | Taxed as per your slab (~30% used here) | 12.5%, no specific exemption |
Three worked examples
- Equity, held 30 months (long-term): bought at ₹5,00,000, sold at ₹8,00,000 — gain of ₹3,00,000, minus the ₹1,25,000 exemption = ₹1,75,000 taxable at 12.5% = ₹21,875, plus 4% cess = ₹22,750 tax.
- Equity, held 6 months (short-term): bought at ₹5,00,000, sold at ₹6,00,000 — gain of ₹1,00,000, no exemption, taxed at 20% = ₹20,000, plus 4% cess = ₹20,800 tax.
- Property, held 36 months (long-term): bought at ₹30,00,000, sold at ₹50,00,000 — gain of ₹20,00,000, taxed at 12.5% = ₹2,50,000, plus 4% cess = ₹2,60,000 tax.
Run your own buy price, sell price, and holding period through our Capital Gains Calculator for an instant classification and tax estimate.
Frequently asked questions
›What is the LTCG exemption limit on shares?
₹1,25,000 per financial year on long-term capital gains from listed equity and equity mutual funds — gains above this threshold are taxed at 12.5%, while gains within it are tax-free.
›What is the STCG exemption limit?
There isn't one — short-term capital gains on listed equity and equity mutual funds are taxed at a flat 20% from the very first rupee of gain, with no annual exemption threshold. This is the key difference from LTCG, which gets a ₹1.25 lakh exemption.
›Is there any exemption for short-term capital gains on shares?
No — short-term gains on listed equity are taxed at a flat 20% with no exemption threshold, unlike long-term gains which get the ₹1.25 lakh annual exemption.
›How is holding period counted — from purchase date or settlement date?
Generally from the date of purchase to the date of sale (allotment/transfer dates for specific instruments can vary slightly) — check the exact rule for your specific asset type if you’re close to the 12 or 24-month boundary.
›Do mutual fund SIP investments each have their own holding period?
Yes — each SIP instalment is treated as a separate purchase for capital gains purposes, so units bought in your first SIP instalment may qualify as long-term while units from a recent instalment are still short-term, even within the same fund.
Try it yourself
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This article is for general information only and isn’t financial, tax, or legal advice. See our disclaimer.