# Capital Gains Tax on Shares and Mutual Funds FY 2026-27 > How gains on shares and mutual funds are taxed in FY 2026-27: 20% STCG, 12.5% LTCG above INR 1.25 lakh, debt funds at slab, and loss harvesting. Source: https://trykosh.com/learn/capital-gains-tax-on-shares-and-mutual-funds Guide - Investing # Capital gains tax on shares and mutual funds Selling shares or fund units at a profit creates a capital gain, and the tax depends on what you sold and how long you held it. Here are the current rules, worked examples, and the legal ways to keep the tax down. Updated 25 October 20266 min readBy the Kosh team On this page[The rules at a glance](#rules)[Worked examples](#worked-examples)[Grandfathering for shares bought before 2018](#grandfathering)[Setting off losses](#losses)[Legal ways to reduce the tax](#reduce)[Year-end checklist](#checklist)[Other things to know](#other)[FAQs](#faq) ## The rules at a glance These rates have applied to sales on or after 23 July 2024 and are unchanged for FY 2026-27. Capital gains tax for resident individuals, FY 2026-27 (plus surcharge where applicable and 4% cess) What you sold Long-term after Short-term rate Long-term rate Listed shares, equity mutual funds (65%+ in Indian equity), equity ETFs 12 months 20% 12.5% on gains above INR 1.25 lakh a year Debt funds bought on or after 1 April 2023 Never long-term Your slab rate Your slab rate Debt funds bought before 1 April 2023 24 months Your slab rate 12.5%, no indexation Gold, international and hybrid funds that aren't equity-oriented, unlisted shares 24 months (12 for listed non-equity ETFs) Your slab rate 12.5%, no indexation Property 24 months Your slab rate 12.5%, or 20% with indexation for land or buildings bought before 23 July 2024 Two features of equity gains surprise people. The INR 1.25 lakh exemption is **per year, across all your equity LTCG**, not per sale. And the new regime's **87A rebate can't be used against these special-rate taxes**, so someone earning INR 7 lakh still pays 20% on short-term equity gains. What a resident does get is the unused basic exemption: if your other income is below INR 4 lakh (new regime), the gap reduces the taxable gain. ## Worked examples Tax on common sales, FY 2026-27, resident, computed with Kosh's calculators Sale Gain Tax including cess Shares bought for INR 4,80,000, sold for INR 6,00,000 after 4 months, INR 1,500 charges INR 1,18,500 short-term INR 24,648 (20%) Equity fund: INR 3,00,000 invested, redeemed for INR 4,50,000 after 30 months INR 1,50,000 long-term INR 3,250 (12.5% on INR 25,000) Shares bought for INR 5,00,000, sold for INR 9,00,000 after 3 years INR 4,00,000 long-term INR 35,750 (12.5% on INR 2,75,000) Debt fund bought in 2024 for INR 3,00,000, redeemed for INR 3,60,000, 30% slab INR 60,000, taxed as income INR 18,720 For shares and funds, the gain is sale value minus cost minus transfer expenses such as brokerage. Securities transaction tax isn't deductible. With SIPs, each instalment is a separate purchase, and units are sold **first in, first out**, so the oldest units go first and their own holding period decides whether that slice is long or short term. [Free tool**Capital gains tax calculator**Pick the asset, enter the purchase and sale dates and prices, and Kosh tells you whether the gain is short-term or long-term and works out the tax under the FY 2026-27 rules.](/tools/capital-gains-tax-calculator)[Free tool**LTCG tax calculator**Find the tax on long-term gains from shares and equity mutual funds, with the INR 1.25 lakh yearly allowance, the 31 January 2018 grandfathering rule, and how much tax-free room you have left this year.](/tools/ltcg-tax-calculator)[Free tool**STCG tax calculator**Sold shares or equity funds within a year? See the short-term capital gains tax at 20%, after brokerage and any short-term losses you can set off.](/tools/stcg-tax-calculator)[Free tool**Mutual fund tax calculator**How a mutual fund redemption is taxed depends on the type of fund, when you bought it and how long you held it. Choose your fund type and Kosh applies the right rule.](/tools/mutual-fund-tax-calculator)[Free tool**Dividend tax calculator**Dividends are taxed in your hands at your slab rate. Enter your dividends and salary to see the real tax, the TDS companies deduct, and what you still need to pay.](/tools/dividend-tax-calculator) ## Grandfathering for shares bought before 2018 Long-term gains on listed equity were tax-free until 31 March 2018. To protect gains made up to then, the cost of shares and equity fund units bought **before 1 February 2018** is stepped up: it is the higher of what you actually paid, and the lower of the price on **31 January 2018** and your sale price. Example: you bought shares for INR 3,00,000 in 2015. They were worth INR 5,50,000 on 31 January 2018 and you sell for INR 9,00,000. Your cost becomes INR 5,50,000, the taxable gain is INR 3,50,000, and after the INR 1.25 lakh exemption the tax is **INR 29,250**. Without grandfathering it would be on a INR 6 lakh gain. Your broker's capital gains statement usually applies this for you; check it does. ## Setting off losses - **Short-term capital losses** can be set off against both short-term and long-term gains. - **Long-term capital losses** can be set off only against long-term gains. - Capital losses can't be set off against salary or other income. - Unused losses carry forward for **8 years**, but only if you file your return by the due date. ## Legal ways to reduce the tax ### Tax-loss harvesting If you've booked gains this year and hold other investments sitting at a loss, selling the losers before 31 March turns a paper loss into a set-off. Say you've booked INR 3,00,000 of equity LTCG (tax INR 22,750) and hold a fund showing a INR 50,000 short-term loss. Selling it cuts the net gain to INR 2,50,000 and the tax to **INR 16,250**, a saving of INR 6,500. If you still want the investment, you can buy back after the sale settles. India has no specific wash-sale rule today, but the trade should be real: a genuine sale and purchase at market prices. ### Gain harvesting with the INR 1.25 lakh allowance The INR 1.25 lakh exemption doesn't carry forward: if you don't use it this year, it's gone. Long-term investors can sell enough units each year to realise about INR 1.25 lakh of LTCG tax-free and reinvest at once, which raises their cost for the future. That saves up to INR 16,250 of tax a year (12.5% plus cess on INR 1.25 lakh), at the price of some transaction costs and, for funds with exit loads, checking those first. ### Hold past 12 months Selling equity at 11 months instead of 13 can change the rate from 12.5% (with the INR 1.25 lakh exemption) to 20%. If you're near the line, the date matters more than a few days of price movement. ## Year-end checklist 1. **In February,** download your broker's capital gains statement and your consolidated account statement for mutual funds. Check that pre-2018 holdings use the grandfathered cost. 2. **Add up equity LTCG booked so far.** If it's under INR 1.25 lakh, consider harvesting the rest of the allowance before 31 March. 3. **List positions at a loss.** Decide whether booking any of them makes sense against gains already taken. 4. **Pay any advance tax** still due on gains by 15 March. 5. **At filing,** report gains in the capital gains schedule (scrip-wise for listed equity LTCG), and check every sale against AIS, which shows them all. ## Other things to know - **Dividends** are taxed at your slab rate as income, not as capital gains, with 10% TDS above INR 10,000 a year from one company or fund house. See the [dividend tax calculator](/tools/dividend-tax-calculator). - **Buybacks:** from October 2024 the whole buyback amount was taxed as dividend at slab rates, with the cost of the shares left as a capital loss. Budget 2026 moved buybacks back towards capital-gains treatment for shareholders, with a higher effective rate for promoters. Check the rules in force on the date before you tender shares. - **Advance tax:** large gains can create advance-tax liability. If you pay the tax on them in the next instalment after the sale, there's no interest for the earlier ones. See the [advance tax guide](/learn/advance-tax-guide). - **Which return:** listed equity LTCG of up to INR 1.25 lakh can go in ITR-1; anything more, or any short-term gain, generally means ITR-2. See [how to file ITR](/learn/how-to-file-itr-salaried). - **Non-residents** pay the same rates but can't use the basic exemption against these gains, and TDS is deducted at source. See [NRI income tax](/learn/nri-income-tax-india). ## Frequently asked questions What is the tax on long-term capital gains on shares? Long-term gains on listed shares and equity mutual funds held for more than 12 months are taxed at 12.5% on the amount above INR 1.25 lakh a year, plus 4% cess. The INR 1.25 lakh exemption is shared across all your equity long-term gains in the year. What is the STCG tax rate on shares in FY 2026-27? Short-term gains on listed shares and equity funds sold within 12 months are taxed at 20% plus cess. The 87A rebate cannot be used against this tax, even if your total income is under INR 12 lakh. How are debt mutual funds taxed now? Gains on debt funds bought on or after 1 April 2023 are added to your income and taxed at your slab rate, however long you hold them. Units bought before that date and held over 24 months are taxed at 12.5% without indexation. What is grandfathering in capital gains? For listed shares and equity fund units bought before 1 February 2018, the cost is taken as the higher of the actual cost and the lower of the 31 January 2018 price and the sale price. It protects gains made before long-term equity gains became taxable. What is tax-loss harvesting? Selling investments that are at a loss before the year ends, so the loss can be set off against gains booked in the same year. Short-term losses offset both short and long-term gains; long-term losses offset only long-term gains. Unused losses carry forward for 8 years if you file on time. Can I carry forward capital losses? Yes, for 8 years, but only if you file your income tax return by the due date for the year of the loss. Carried-forward losses follow the same set-off rules as current-year losses. ## Sources - [Income Tax Department](https://www.incometax.gov.in/) - [SEBI investor education](https://investor.sebi.gov.in/) Written by the Kosh team and checked against the rules in force on 25 October 2026. This guide is general information, not tax, legal or investment advice. Kosh is an educational financial planning tool by Primedepth Labs. It is not a SEBI-registered investment adviser and does not offer personalised investment advice, hold your money or execute trades. Markets carry risk; read scheme documents carefully and consult a registered adviser before acting. ## Upload your statement and Kosh does this for you. Kosh reads your bank and card statements, works out your tax under both regimes and turns guides like this one into your own numbers and next steps. [Start free](/signup?via=learn-capital-gains-tax-on-shares-and-mutual-funds)