📘 Understanding Capital Gains Tax Changes in India: Before and After 23rd July 2024

Explore how India’s capital gains tax rules changed on 23rd July 2024 with practical, client-focused examples. Covers equity shares, mutual funds, real estate, NRI taxation, and more.

🔍 Overview: What's Changed from 23rd July 2024?

India introduced a restructured capital gains taxation regime effective 23rd July 2024, with the aim of simplifying and unifying tax treatment across asset classes. Here are the highlights:

• Uniform LTCG rate of 12.5% across all asset types (with limited indexation).

• STCG on listed shares now taxed at 20% (up from 15%).

• LTCG exemption threshold raised from ₹1 lakh to ₹1.25 lakh per financial year.

• Reduced holding period for non-equity assets: From 36 months to 24 months for LTCG classification.

  
  

🧾 Capital Gains Examples Before 23rd July 2024

Example 1: Equity Shares Sold Before 23 July 2024

• Mr. Ajay bought 500 shares at ₹200 each on 10 Jan 2022.

• Sold on 1 June 2024 at ₹300 each.

• Holding >12 months → Long-Term

• LTCG = (₹300 - ₹200) × 500 = ₹50,000

• Exempt up to ₹1 lakh → Entirely exempt

• Tax Payable: ₹0

Example 2: LTCG Exceeding Exemption Limit Before 23 July

• Mr. Sameer sold shares on 20 June 2024; LTCG = ₹1.80 lakh

• Exemption: ₹1 lakh → Taxable: ₹80,000

• Tax @10% (without indexation) = ₹8,000

Example 3: Sale of Land in April 2024

• Purchased: ₹20 lakh (in 2010)

• Sold: ₹70 lakh

• Indexed Cost (CII): ₹20L × (348/167) = ₹41.67L

• LTCG = ₹70L - ₹41.67L = ₹28.33L

• Tax @20% with indexation = ₹5.67 lakh

  
  

🧾 Capital Gains Examples After 23rd July 2024

Example 4: Equity Shares Sold Post 23 July 2024

• Bought in Aug 2022 for ₹1,00,000

• Sold in Aug 2025 for ₹1,80,000 → LTCG = ₹80,000

• Exemption: ₹1.25 lakh → Tax Payable: ₹0

Example 5: LTCG Above ₹1.25 Lakh Exemption

• Ms. Leena earned ₹2 lakh LTCG on shares sold on 1 Aug 2024

• Exemption: ₹1.25 lakh → Taxable: ₹75,000

• Tax @12.5% = ₹9,375

Example 6: Real Estate Sale With and Without Indexation

• Purchase (2004): ₹12 lakh | Sale (Oct 2025): ₹60 lakh

• Option 1 (Indexed): Indexed Cost = ₹39.77L → LTCG = ₹20.23L → Tax @20% = ₹4.05L

• Option 2 (Flat): Gain = ₹48L → Tax @12.5% = ₹6L

• Choose Lower Tax: ₹4.05 lakh

Example 7: Short-Term Gain on Land (Sold Within 24 Months)

• Bought: May 2023 for ₹15L | Sold: May 2025 for ₹25L

• Holding: 2 years → STCG

• Gain: ₹10L → Taxed as per slab (e.g., 30%) = ₹3L

Example 8: STCG on Equity Mutual Funds

• Bought: Jan 2025 for ₹2L | Sold: June 2025 for ₹2.5L

• STCG = ₹50,000 → Tax @20% = ₹10,000

Example 9: NRI Sells Shares After 23 July

• Bought: $10,000 (2020) | Sold: $12,000 (2025)

• Gain: $2,000 = ₹1.6 lakh

• Exemption: ₹1.25 lakh → Taxable: ₹35,000

• Tax @12.5% = ₹4,375

  
  

🧾 Mixed Period Capital Gains (Before and After 23 July)

Example 10: Gains Across Both Periods

• Mr. Arvind sold shares on:

  • 1st June 2024 → LTCG = ₹80,000

  • 30th July 2024 → LTCG = ₹80,000

• Total LTCG = ₹1.60 lakh

• Exemption of ₹1.25 lakh applies for entire FY 2024–25

• Taxable LTCG = ₹35,000 → Tax @12.5% = ₹4,375

Note: Exemption is applied first to the earliest gains. In this case, ₹80,000 from 1st June is exempt first, followed by ₹45,000 from 30th July (₹1.25L - ₹80K = ₹45K exemption left).

Example 11: Applying Exemption to Earliest Gains

• Mr. Rahul sold shares:

  • Before 23 July: ₹90,000 LTCG

  • After 23 July: ₹80,000 LTCG

• Total LTCG = ₹1.70 lakh

Treatment:

1. Apply ₹1.25 lakh exemption to earliest gains (₹90K first)

2. Remaining exemption = ₹35K → Applied to post-23 July gains

3. Taxable Post-23 July LTCG = ₹80K - ₹35K = ₹45K

4. Tax @12.5% = ₹5,625

   
   

🧠 Capital Gains Tax Planning Tips

• Split gains across years to stay below ₹1.25 lakh exemption.

• Use indexation for property and non-equity asset gains.

• Claim Sec 54/54F exemptions for residential reinvestments.

• Invest under Sec 54EC in NHAI/REC bonds within 6 months to defer tax.

• NRI clients should evaluate DTAA benefits and applicable TDS rates.

💡 Example: Mr. Kiran earns ₹30 lakh from land sale in Aug 2024. He invests ₹30 lakh in 54EC bonds in Oct 2024 → Tax Payable: ₹0.

📋 Capital Gains Tax Summary Table

Asset Type	Holding Period	LTCG Rate	STCG Rate	Exemption Limit	Indexation Available
Listed Shares	>12 months	12.5% (post) / 10% (pre)	20% (post) / 15% (pre)	₹1.25 lakh/year	❌
Unlisted Shares	>24 months	12.5%	Slab rate	❌	❌
Immovable Property	>24 months	20% (with indexation) / 12.5%	Slab rate	❌	✅
Equity Mutual Funds	>12 months	12.5%	20%	₹1.25 lakh/year	❌

📝 Conclusion

The capital gains tax reforms from 23rd July 2024 simplify computation and bring uniformity across investments. From equity to property to NRIs, these examples and strategies help clients make informed, tax-efficient decisions.

Need help calculating or planning your capital gains tax? Contact us for a customised consultation.

Tags: Capital Gains, Income Tax India 2024, LTCG, STCG, Mutual Fund Tax, Real Estate Taxation, NRI Tax Rules