Capital gains are the profit on transferring a capital asset. Shares, mutual fund units, gold, land and a building are the usual ones on this site. The profit is not the sale price. It is the sale price, after a broker or other transfer cost, minus what you paid and the cost of improvement the Act allows.
The tax then depends on two questions. What did you sell? How long did you hold it? Section 2(101) answers the second question. Twelve months is the line for listed equity and an equity fund. Twenty-four months is the line for physical gold and for land or a building. A sale on the anniversary is still short-term.
From 23 July 2024 through 31 March 2027 the long-term rate on most assets is 12.5% under section 197. Listed equity that paid securities transaction tax is section 198, at the same rate, but only above ₹1,25,000 of long-term gain in the year. Short-term listed equity is section 196 at 20%. Other short-term gains join your slabs. A debt fund bought on or after 1 April 2023 is taxed at slab rates whatever the holding, under section 76.
Indexation is no longer the normal method. Section 197(3) keeps it as a choice only for land or a building bought before 23 July 2024, and only for a resident individual or a Hindu undivided family. Cess of 4% sits on all of these taxes. The section 156 rebate does not cancel them.
A worked example
Three sales, each with ₹15,00,000 of other income in the new regime, from the capital gains calculator.
Listed equity bought on 1 April 2022 for ₹1,00,000 and sold on 15 June 2026 for ₹4,00,000. Gain ₹3,00,000. Exemption used ₹1,25,000. Extra tax ₹22,750.
The same kind of units, bought on 1 August 2025 for ₹1,00,000 and sold for ₹1,40,000. The holding is still short. Gain ₹40,000. Extra tax ₹8,320, with no exemption.
Physical gold bought on 10 January 2024 for ₹80,000 and sold for ₹1,20,000. The holding is long. Gain ₹40,000. Tax before cess ₹5,000. There is no ₹1,25,000 exemption on gold. The calculator asks for the asset so it can pick the section. The guide walks through the same split.
Mistakes people make
- Taxing the sale price instead of the gain.
- Using one rate for shares, gold and a flat.
- Knocking ₹1,25,000 off gold or off a short-term share sale.
- Indexing a share because an old worksheet did.
- Assuming the new regime’s slabs replace section 198.
The section
Section 2(101) is the holding test. Section 196 (this was section 111A) and section 198 (this was section 112A) are the equity rates. Section 197 (this was section 112) is the other long-term rate. Section 76 is the slab treatment for a debt fund bought on or after 1 April 2023.
Questions
Are capital gains taxed in my slab?
Sometimes. Short-term gold and a short-term house sale join your slabs. Listed equity is different: short-term is 20% under section 196, and long-term is 12.5% above ₹1,25,000 under section 198.
Is the sale price the capital gain?
No. The gain is sale price minus cost and transfer expenses. Equity bought for ₹1,00,000 and sold for ₹4,00,000 has a gain of ₹3,00,000, not ₹4,00,000.
Do I pay capital gains tax if my salary is under the rebate?
You can. Section 156 does not cancel tax under sections 196, 197 or 198. A small salary and a large share sale are taxed as two different things on the same return.
Sources
Figures checked 28 Oct 2026.