What is the LTCG tax rate on shares for AY 2026-27?

Long-term capital gains on listed equity shares and equity mutual funds (held over 12 months, STT paid) are taxed at 12.5% on gains above Rs 1.25 lakh per year, with no indexation.

What is the STCG tax rate for AY 2026-27?

Short-term capital gains on listed equity and equity mutual funds under Section 111A are taxed at 20% for transfers on or after 23 July 2024.

Do I pay tax on capital gains if my income is below Rs 12 lakh?

Yes. The Section 87A rebate does not cover capital gains taxed at special rates, so STCG and LTCG are taxed separately even if your other income is below Rs 12 lakh.

How are debt mutual funds taxed for AY 2026-27?

Gains on debt mutual funds bought on or after 1 April 2023 are treated as short-term regardless of holding period and taxed at your slab rate, with no indexation. Older units and other assets can have different rules.

Can I set off capital losses?

Short-term losses can be set off against both short-term and long-term gains; long-term losses only against long-term gains. Unabsorbed losses carry forward for 8 years, but only if you file your return by the due date.

Is the Rs 1.25 lakh LTCG exemption per year or per transaction?

It is per financial year, across all your listed equity and equity mutual fund long-term gains combined — not per transaction.

Blog · Investing · Updated 12 Jul 2026 · 9 min read

Capital Gains Tax on Shares & Mutual Funds AY 2026-27 (STCG & LTCG)

How your stock and mutual-fund gains are taxed for FY 2025-26 — the rates, holding periods, the ₹1.25 lakh exemption, loss set-off, and the trap around the ₹12 lakh rebate.

The rates at a glance (listed equity & equity MFs)

Type	Holding period	Tax rate
STCG (Sec 111A)	Up to 12 months	20%
LTCG (Sec 112A)	Over 12 months	12.5% on gains above ₹1.25 lakh/year

The ₹1.25 lakh LTCG exemption is per financial year, across all your equity holdings combined. LTCG is taxed at a flat 12.5% with no indexation. STCG at 20% applies to transfers on or after 23 July 2024.

Worked example

Say in FY 2025-26 you booked ₹3 lakh of long-term gains on equity mutual funds and ₹50,000 of short-term gains on shares:

LTCG: ₹3,00,000 − ₹1,25,000 exemption = ₹1,75,000 taxable at 12.5% = ₹21,875.
STCG: ₹50,000 at 20% = ₹10,000.
Plus 4% cess on the total.

This is paid on top of tax on your salary/other income, and the ₹12 lakh rebate does not reduce it.

The trap: the ₹12 lakh rebate does NOT cover capital gains

Even if your salary is under ₹12 lakh and pays zero tax under the new regime, your STCG and LTCG are taxed separately at the special rates above — the Section 87A rebate doesn't apply to them. Many first-time investors are caught out by this. More: the 87A rebate explained.

Set off & carry forward your losses

Short-term losses can be set off against both short-term and long-term gains.
Long-term losses can be set off only against long-term gains.
Unabsorbed losses carry forward for 8 years — but only if you file your ITR by the due date (31 July 2026). File late and you forfeit this valuable benefit.

Debt funds, property & other assets

Rules differ for non-equity assets:

Debt mutual funds bought on/after 1 April 2023 are taxed at your slab rate as short-term, regardless of holding period, with no indexation.
Property and unlisted assets held long-term generally attract 12.5% LTCG (subject to specific provisions and holding periods).
Foreign shares (e.g. US RSUs) have a longer long-term threshold (over 24 months).

Because these vary, it's worth a professional check.

Which ITR form & how to report

With STCG or LTCG above ₹1.25 lakh, you file ITR-2 (or ITR-3 with business income). If your only capital gain is LTCG up to ₹1.25 lakh with no losses, ITR-1 now works. See which ITR form to file. Report each trade from your broker's capital-gains statement, and reconcile with your AIS.

Gains from stocks or MFs? Let a CA handle it

We reconcile your broker statements, compute STCG/LTCG correctly, set off losses, and file the right form.

File with a CA →

General information for AY 2026-27, not individual tax advice. Rates and rules can change via notification and vary by asset; verify for your situation. Reviewed by a Chartered Accountant.