Capital gains tax

Tax on the profit from selling an asset. For listed Indian shares and equity mutual funds, gains on holdings kept more than twelve months are long-term and others are short-term, and the two are taxed at different rates.

Under the rules in force from July 2024, short-term gains on listed equity are taxed at 20% and long-term gains at 12.5% on the amount above ₹1.25 lakh a year. Both rates are before surcharge and cess. With ₹3,25,000 of long-term gains in a year, you'd pay ₹25,000 on the ₹2,00,000 above the exemption.

Other assets follow other rules. Debt fund units bought after March 2023 are taxed at the investor's slab rate whatever the holding period, and property has its own periods and rates. Tax also changes the comparison between strategies, because a portfolio turned over every year pays the higher short-term rate on all of its gains.

Check the Finance Act for the year in question.