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Capital gains 101: STCG, LTCG and what's taxable when you sell

· 3 min read
The Sahidha team
Building Sahidha in the open

Sell a mutual fund, some shares, gold, or a property, and the profit is a capital gain — and most capital gains are taxable. The rules differ by what you sold and how long you held it. Here's the mental model, minus the jargon.

caution

General educational information, not tax advice. Capital-gains rules — including holding periods, rates and exemptions — have changed in recent Budgets and may change again. Always verify the current rules for your specific asset and date of sale with a professional or incometax.gov.in.

The core idea​

A capital gain is simply:

Sale value − cost of acquisition (− allowable expenses/improvements) = capital gain

Two things then decide how it's taxed: the type of asset and the holding period (short-term vs long-term).

Short-term vs long-term​

Every asset class has a threshold holding period. Hold longer than the threshold and the gain is long-term (LTCG); sell sooner and it's short-term (STCG). The threshold differs by asset:

  • Listed equity shares and equity mutual funds — one threshold.
  • Debt funds, gold, unlisted shares, property — different thresholds and, in some cases, different treatment entirely.

Why "type of asset" matters so much​

The same ₹1,00,000 profit is taxed differently depending on what produced it:

  • Listed equity / equity mutual funds — concessional treatment, with a separate rule for STCG vs LTCG and (for LTCG) an annual exemption slab.
  • Debt mutual funds — taxed differently from equity; recent changes affected how gains are treated.
  • Gold / physical assets — their own holding-period and computation rules.
  • Property — long-term rules, possible exemptions if you reinvest in another house or specified bonds.

This is exactly why a single "profit" number isn't enough — you need the gain bucketed by asset type and holding period.

Indexation (and why it's changed)​

For some long-term assets, the cost used to be adjusted upward for inflation ("indexation"), reducing the taxable gain. Recent law changed which assets get indexation and introduced alternative flat rates.

Set-off and carry-forward​

Losses aren't wasted:

  • A capital loss can be set off against capital gains under the rules (with restrictions on short-term vs long-term).
  • Unused losses can usually be carried forward for a number of years — but only if you file your return on time. That alone is a reason not to skip filing in a loss year.

What to track through the year​

For a clean capital-gains schedule at filing time, keep:

  • Buy date and cost for every holding (including reinvested dividends/SIPs).
  • Sale date and value.
  • The asset type (so the right rule applies).
  • Broker/AMC capital-gains statements as supporting proof.

Reconstructing this in July from a year of SIPs across three AMCs is the painful way. Recording it as you go is the easy way.

How Sahidha helps​

  • Holdings valuation: record cost vs market value per FY for each investment, so realised and unrealised gains are always current.
  • A per-FY capital-gains report rolls up realised gains across all your holdings — ready for your ITR and your CA.
  • Because everything is tracked per the Indian financial year, your gains land in the right year automatically.

You still confirm the exact rates with your advisor — but the numbers are ready, bucketed, and reconcilable.

👉 Sahidha is in the making — try it at sahidha.com.

Educational information only, not tax advice. Verify all rates, thresholds and exemptions against the current law.