What is the Tax Rate on Capital Gains?

Let's clear the confusion of what is the tax rate on capital gains?

The income you received from selling a "capital asset" is called "income from capital gains." These gains are taxable in the fiscal year when there is the transfer of the capital asset, and this taxation is called capital gains tax. Capital gains are of two types: short-term capital gains (STCG) and long-term capital gains (LTCG).

The assets you hold for 36 months or less are called STCA (Short-term capital asset).

Whereas the assets you hold for a period exceeding 36 months are called the LTCA (Long-term capital asset).

What rate is capital gains tax - LTCG?

In LTCG, a 10% tax is applicable on the sale of equity shares or units of equity-oriented mutual fund above Rs 1 lakh, or other than this a 20% of tax is applicable.

In STCG, when securities transaction tax STT is not applicable, the tax would be applied according to the normal tax slab. When STT is applicable, a 15% tax is applicable.  

For equity funds, 15% of tax is applicable.

For debt funds, either short-term capital gains or long-term capital gains, tax is applicable according to the slab rates.

Exemptions available on capital gains in section 54 which states exemption on the sale of house property on purchase of another house property, section 54F which states exemption on capital gains on the sale of any asset other than house property, section 54EC which states exemption on the sale of house property on reinvesting in specific bonds. So now if someone comes up and asks

what is my capital gains tax rate, you should be able to share this information with them.

You can also invest in capital gains account scheme. This deposit can then be claimed as an exemption from capital gains, and no tax has to be paid on it.

You can also save tax on the sale of agricultural land. It is entirely exempt from income tax.

Section 54B is also available for exemption which states exemption on capital gains from the transfer of land used for agricultural purposes.

It is to be noted that short-term capital losses can be offset against either short-term capital gains or long-term capital gains whereas long-term capital losses can only be offset against long-term capital gains.

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