What is the difference between short-term and long-term capital gains?

It depends on the holding period. Listed shares and equity mutual funds are long-term after 12 months; property, land, unlisted shares and gold after 24 months. Short-term equity gains are taxed at 20%, long-term equity at 12.5% over a ₹1.25 lakh yearly exemption, and property/land LTCG at 12.5%.

If I have ₹5 lakh short-term and ₹5 lakh long-term equity gains, how much tax?

STCG of ₹5 lakh at 20% is ₹1,00,000. For the ₹5 lakh LTCG, the first ₹1.25 lakh is exempt and ₹3.75 lakh is taxed at 12.5% = ₹46,875. Total roughly ₹1.47 lakh plus cess.

Do I need to file ITR-2 if I sold IPO shares or mutual-fund units?

Yes. Selling listed shares (including IPO allotments) or redeeming equity mutual-fund units is a capital gain, which cannot be reported in ITR-1 — file ITR-2 and report it under the capital-gains schedule.

Is LTCG under 112A added to total income?

Yes, it is part of total income, but the tax on it is computed at the special rate of 12.5% after the ₹1.25 lakh yearly exemption, not at your slab. The 87A rebate does not apply to this special-rate LTCG.

Research › Income Tax › Questions & Answers › Short-term vs long-term capital gains —...

Income Tax · Capital gains

Short-term vs long-term capital gains — rates and how they're taxed

✍️ Answered by EaseValue Advisors · Updated 17 Jul 2026 · 6-min read

Quick answer

Capital gain is short-term (STCG) or long-term (LTCG) depending on how long you held the asset. Equity STCG is 20%, equity LTCG 12.5% over ₹1.25 lakh; property/land/other LTCG is 12.5%. Gains are part of total income but taxed at these special rates.

Holding period — short vs long

Asset	Long-term if held over
Listed shares, equity mutual funds	12 months
Property, land, unlisted shares, gold	24 months

The rates (FY 2025-26)

Gain	Rate
Listed equity / equity MF — STCG	20% (Sec 196, old 111A)
Listed equity / equity MF — LTCG	12.5% over ₹1.25L/yr exempt (Sec 198, old 112A)
Property / land / gold — LTCG	12.5% without indexation*
Other STCG (property, gold, unlisted)	Your slab rate

* Land/building bought before 23 July 2024: a resident individual/HUF may pick the lower of 12.5% (no indexation) or 20% (with indexation).

How gains sit in your return

Capital gains are part of your total income but taxed at the special rates above, not your slab (except non-equity STCG). Example — LTCG under 112A is included in total income and shown there, but the tax on it is computed at 12.5% after the ₹1.25 lakh exemption. The 87A rebate doesn't apply to this special-rate LTCG.

Worked examples

STCG ₹5L + LTCG ₹5L (equity): STCG 5L × 20% = ₹1,00,000; LTCG — first ₹1.25L exempt, ₹3.75L × 12.5% = ₹46,875. Total ≈ ₹1.47 lakh (+ cess).
Salary ₹3L + equity gains ₹3L: salary within/near the exemption; equity STCG at 20% and LTCG at 12.5% over ₹1.25L. A resident can adjust the unused basic exemption against these gains.

Shares/IPO/MF units and land

Sold IPO-allotted or any listed shares, or redeemed equity mutual-fund units? That's capital gains → file ITR-2 and report under the CG schedule.
Sold land or property? LTCG at 12.5% — but you can make it tax-free by reinvesting: buy a house (54F) or 54EC bonds.

Full reckoner: capital-gains rates · Which form: ITR-1 vs ITR-2.

General information based on the Income-tax Act as it stands, not advice on your specific case. Tax outcomes depend on your exact facts and residential status. © EaseValue Advisors LLP.

Want a CA to handle it?

We compute your capital-gains tax and use the 54-series to cut it.

💬 Ask a CA