LTCG and STCG Tax in 2026: A Complete Guide

# LTCG and STCG Tax in 2026: A Complete Guide Capital gains tax rules changed in the 2024 budget and apply fully in FY 2026-27. Here is the current regime. ## Equity (Mutual Funds and Direct Stocks) **STCG (held < 1 year):** 20% flat. No exemption. **LTCG (held ≥ 1 year):** 12.5% on gains above ₹1.25 lakh per financial year. No indexation. Note: The exemption limit was raised from ₹1L to ₹1.25L in Budget 2024. ## Debt Mutual Funds As of April 2023, debt funds no longer get LTCG treatment regardless of holding period. All gains are added to income and taxed at your slab rate. Indexation benefit is gone. This makes debt funds less attractive vs FDs for investors in lower brackets. ## Real Estate LTCG (held ≥ 2 years): 12.5% without indexation (changed in Budget 2024). Previously 20% with indexation. For high-appreciation properties, the new rule is often worse. ## Gold and Gold ETFs Physical gold held ≥ 2 years: LTCG at 12.5% without indexation (changed). Gold ETFs and gold mutual funds: same as debt funds — gains taxed at slab. ## Tax Harvesting Strategy If your LTCG in a financial year approaches ₹1.25 lakh, consider booking profits and re-entering. This resets your cost basis with no tax. Do this before March 31 each year. ## Key Planning Implication With debt funds losing indexation advantage, PPF and VPF become more attractive for debt allocation in high-tax brackets. For short-term (< 3 years) goals, FD or ultra-short duration funds are now comparably taxed.