How to Calculate Capital Gains Tax on Shares and Property

To calculate capital gains tax, subtract the cost of the asset and the expenses of selling it from the sale value, decide whether the gain is short-term or long-term from how long you held it, and apply the rate for that asset. For tax year 2026-27 the key rates are 20% on short-term gains from listed shares and 12.5% on long-term gains.

Below: holding periods, the rates, grandfathering for old shares, the indexation choice for property, set-off of losses and worked examples for shares and a flat.

Short-term or long-term?

• Listed shares, equity mutual funds and other listed securities: long-term after 12 months.
• Property, gold, unlisted shares and most other assets: long-term after 24 months.
• Debt mutual funds bought on or after 1 April 2023: always short-term, taxed at slab rates, however long you hold them.

Tax rates for 2026-27

• Short-term gains on listed equity (STT paid): 20%.
• Long-term gains on any asset: 12.5% without indexation.
• Long-term gains on listed equity: the first ₹1.25 lakh a year is exempt.
• Other short-term gains: added to income and taxed at your slab rate.
• 4% cess on top; surcharge applies to higher incomes.

Grandfathering for shares bought before 1 February 2018

For listed shares and equity funds bought before 1 February 2018, the cost is the higher of the actual cost and the fair market value on 31 January 2018 (capped at the sale value). Gains up to that date stay tax-free.

Example: shares bought in 2017 for ₹1,80,000, worth ₹2,10,000 on 31 January 2018, sold in May 2026 for ₹2,60,000 with ₹450 of charges. Cost = ₹2,10,000, so the long-term gain is ₹49,550 – inside the ₹1.25 lakh exemption if it's your only equity gain.

Indexation choice for property bought before 23 July 2024

Resident individuals and HUFs selling land or a building bought before 23 July 2024 pay the lower of 12.5% on the gain without indexation and 20% on the gain with indexation. Indexation raises the cost using the Cost Inflation Index (CII): cost × CII of the year of sale ÷ CII of the year of purchase.

1. Flat bought in June 2012 (CII 200) for ₹42 lakh, with ₹3 lakh of improvement; sold in September 2026 (CII 384) for ₹95 lakh with ₹1.9 lakh of brokerage.
2. Without indexation: ₹95 lakh − ₹1.9 lakh − ₹45 lakh = ₹48.1 lakh × 12.5% = ₹6,01,250.
3. With indexation: indexed cost ₹45 lakh × 384 ÷ 200 = ₹86.4 lakh; gain ₹6.7 lakh × 20% = ₹1,34,000.
4. Tax payable is the lower: ₹1,34,000 plus cess. (Strictly, improvement is indexed from the year it was made; this example uses the purchase year for simplicity.)

Set-off of capital losses

• Net gains and losses within each type first.
• A short-term loss can be set off against any capital gain, short or long term.
• A long-term loss can be set off only against long-term gains.
• Losses left over carry forward for eight years, provided you file your return on time.
• Capital losses can't be set off against salary or business income.

Reinvesting to save tax

Long-term gains on a house can be exempted by buying another residential house within one year before or two years after the sale (or building one within three years), up to ₹10 crore. Gains on land or buildings can also be invested in specified bonds (NHAI, REC, PFC, IRFC) within six months, up to ₹50 lakh. For other long-term assets, investing the net sale proceeds in a house gives a proportionate exemption. These were sections 54, 54EC and 54F of the old Act; check the conditions before you rely on them.

Calculate every sale in Excel

Our free Capital Gains Calculator takes up to 200 sales, works out the holding period and term, applies grandfathering and the indexation choice with the CII table, sets off losses in the right order, applies the ₹1.25 lakh exemption and estimates the tax. The Pro edition adds a reinvestment exemption planner with deadlines and an LTCG harvesting planner. Feed the result into the Advance Tax Calculator so the gain is covered in the next instalment, and use the CAGR calculator to see the return the gain represents.