Capital Gains Tax 2025: LTCG 12.5%, STCG 20%, Indexation Removal – Complete Impact Calculator
How the July 2024 changes affect property, stocks, mutual funds, gold, and other assets with strategic sale timing
Written by
CA Ashama Rajawat
Finance Minister Nirmala Sitharaman dropped a bombshell on July 23, 2024: LTCG rate increased to 12.5%, STCG to 20%, and indexation benefit REMOVED for property sold after July 23, 2024.
What Changed on July 23, 2024?
| Asset Type | Before July 23, 2024 | After July 23, 2024 |
|---|---|---|
| Equity Stocks/MF (LTCG) | 10% above ₹1L | 12.5% above ₹1.25L |
| Equity (STCG) | 15% | 20% |
| Property (LTCG) | 20% with indexation | 12.5% without indexation |
| Gold, Debt MF (LTCG) | 20% with indexation | 12.5% without indexation |
Indexation Removal: The Biggest Impact
Indexation adjusts your purchase price for inflation using the Cost Inflation Index (CII), reducing taxable gains.
With Indexation (Pre-July 2024):
- • Property bought in 2010: ₹50 lakh
- • CII 2010: 167, CII 2024: 363
- • Indexed cost: ₹50L × (363/167) = ₹1.09 crore
- • Sold in 2024: ₹1.5 crore
- • Taxable gain: ₹1.5Cr - ₹1.09Cr = ₹41L
- • Tax @ 20%: ₹8.2 lakh
Without Indexation (Post-July 2024):
- • Same property, same sale
- • Taxable gain: ₹1.5Cr - ₹50L = ₹1 crore
- • Tax @ 12.5%: ₹12.5 lakh
- • ₹4.3 lakh MORE tax despite lower rate!
Asset-Wise Impact Analysis
1. Real Estate (Biggest Loser)
Property held for many years loses indexation benefit. Older properties (bought pre-2015) face significantly higher tax.
Breakeven Analysis:
- • Held 2-5 years: New regime better (12.5% without indexation)
- • Held 6-10 years: Case-by-case
- • Held 10+ years: Old regime better (20% with indexation)
2. Equity Stocks & Mutual Funds
LTCG: 10% → 12.5%, but exemption limit raised ₹1L → ₹1.25L. STCG: 15% → 20% (major hit for traders).
Who's Affected:
- • Long-term investors with gains > ₹1.25L: 2.5% more tax
- • Short-term traders: 5% more tax (15% → 20%)
- • Small investors (gains under ₹1.25L): No impact
3. Gold, Debt Mutual Funds (Winners)
20% with indexation → 12.5% without indexation. For gold held less than 7-8 years, new regime is better.
4. Unlisted Shares (Mixed)
LTCG: 20% with indexation → 12.5% without. STCG: Slab rate → 20%. Short-term sellers face higher tax.
Grandfathering Clause: Critical Date
You get ONE-TIME choice (at the time of sale):
Option A: New Regime
12.5% tax without indexation
Option B: Old Regime
20% tax with indexation (only if property bought before July 23, 2024)
Important: Calculate both before deciding. Older properties usually benefit from indexation.
Real-World Calculation Examples
Example 1: Old Property (Bought 2005)
Old Regime (20% + Indexation):
- • Purchase 2005: ₹20L
- • CII 2005: 117, CII 2024: 363
- • Indexed: ₹20L × (363/117) = ₹62L
- • Sale: ₹80L
- • Gain: ₹18L
- • Tax @ 20%: ₹3.6L
New Regime (12.5%, No Indexation):
- • Purchase: ₹20L
- • Sale: ₹80L
- • Gain: ₹60L
- • Tax @ 12.5%: ₹7.5L
- • Old regime saves ₹3.9L!
Example 2: Recent Property (Bought 2022)
Old Regime:
- • Purchase 2022: ₹80L
- • Indexed: ₹80L × (363/331) = ₹87.7L
- • Sale: ₹1Cr
- • Gain: ₹12.3L
- • Tax @ 20%: ₹2.46L
New Regime (Better!):
- • Gain: ₹20L
- • Tax @ 12.5%: ₹2.5L
- • Minimal difference, simpler calculation
Section 54/54F Exemptions Still Available
Section 54: Sell residential property, buy another within 2 years → capital gains exempt up to investment amount
Section 54F: Sell any asset, buy residential property → full exemption if no other house owned
Section 54EC: Invest gains in bonds (REC, NHAI) within 6 months → exempt up to ₹50L
Good News: These exemptions work under BOTH old and new regime!
Strategic Sale Timing
For Old Properties (Bought Pre-2015):
Choose old regime with indexation. File ITR carefully showing both calculations and opting for beneficial option.
For Recent Properties (Bought 2020+):
New regime (12.5% without indexation) likely better due to minimal inflation adjustment.
For Equity Investors:
Harvest gains up to ₹1.25L annually (tax-free). Consider holding periods (12 months for LTCG vs instant STCG at 20%).
Conclusion
The July 2024 capital gains changes are the most significant in decades. Property sellers lose indexation (huge impact for old properties), equity traders face 20% STCG (up from 15%), but long-term equity investors get marginally higher exemption limit. Always calculate tax under both regimes for properties bought before July 23, 2024, and choose the beneficial option. For sales after this date, you're locked into the new regime—no indexation, flat 12.5% LTCG.