Listed Equity and Equity Mutual Funds
For listed equity shares and equity-oriented mutual funds (equity allocation ≥ 65%), the holding period threshold is 12 months. Gains on assets held less than 12 months are STCG, taxed at 20% under Section 111A (increased from 15% in Budget 2024, effective July 23, 2024). Gains on assets held 12 months or more are LTCG, taxed at 12.5% under Section 112A on gains above ₹1.25 lakh per year (increased from ₹1 lakh in Budget 2024). The ₹1.25 lakh LTCG exemption applies across all equity assets combined — not per asset. STT (Securities Transaction Tax) must have been paid on both purchase and sale for these rates to apply.
Immovable Property (Post-July 23, 2024)
For immovable property, the holding period threshold is 24 months. STCG (held less than 24 months) is taxed at the applicable slab rate. LTCG (held 24 months or more) is taxed at 12.5% without indexation under Section 112 for sales after July 23, 2024. Budget 2024 removed the indexation benefit (previously 20% with indexation). For property acquired before July 23, 2024 and sold after that date, taxpayers have a one-time option to choose between 20% with indexation or 12.5% without indexation — whichever is lower. This option is available only for resident individuals and HUFs.
Debt Mutual Funds and Other Assets
Debt mutual funds (equity allocation below 35%) purchased on or after April 1, 2023 are taxed at the applicable slab rate regardless of holding period — there is no LTCG benefit. For debt funds purchased before April 1, 2023, the old rules apply: LTCG (held 36 months or more) at 20% with indexation. Gold ETFs and international funds follow the same rules as debt funds (slab rate for purchases after April 1, 2023). Physical gold has a 24-month threshold: STCG at slab rate, LTCG at 12.5% without indexation (post-July 23, 2024 Budget change).
Exemptions: Sections 54, 54F, and 54EC
LTCG on property can be exempted under Section 54 (reinvest in another residential property within 2 years of sale or 3 years if under construction), Section 54F (LTCG on any asset other than residential property — reinvest net sale proceeds in a residential property), or Section 54EC (invest up to ₹50 lakh in specified bonds — NHAI or REC — within 6 months of sale, with a 5-year lock-in). These exemptions are not available for STCG or for equity capital gains.