🔹Capital Gains Tax Rules: AY 2025-26 vs AY 2026-27
Capital Gains Tax Rules have undergone significant changes for AY 2026-27. Taxpayers dealing with property, equity shares, or mutual funds must understand the revised tax rates, holding periods, indexation provisions, and exemptions. This guide compares Capital Gains Tax Rules applicable in AY 2025-26 and AY 2026-27 to help investors and property owners plan their taxes effectively.
This blog explains capital gains in detail; what they are, how they are computed, asset‑wise holding periods, valuation rules, applicable tax rates, and exemptions. It also highlights the differences between AY 2025-26 and AY 2026-27, helping taxpayers understand how these changes impact their ITR filing.
🔹 What is Capital Gain?
Capital gain is the profit arising from the transfer of a capital asset. It is chargeable to tax under Section 45(1) in the year of transfer.
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Computation Formula:
[ Capital Gain = Full Value of Consideration – (Expenses + Cost of Acquisition + Cost of Improvement) ]
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Key Points:
- Certain transfers are excluded under Section 47.
• Reinvestment benefits under Sections 54 to 54GB allow exemption.
• Capital gains are classified as short-term or long-term depending on the holding period.
🔹 Asset-wise Holding Period and Valuation Rules
🏠 Immovable Property (Land, Building, or Both)
- Holding Period:
- Short-term: Held for less than 24 months.
• Long-term: Held for 24 months or more.
- Valuation Rules:
- Full Value of Consideration (Section 50C): Higher of actual consideration or Stamp Duty Value (SDV). If SDV exceeds actual consideration by more than 10%, SDV is deemed full value.
• Cost of Acquisition: For assets acquired before 01-04-2001, cost is higher of actual purchase price or FMV as on 01-04-2001 (subject to SDV cap).
• Cost of Improvement: Only capital expenditure incurred on or after 01-04-2001 is considered.
📈 Equity Shares
- Holding Period:
- Short-term: Held for less than 12 months.
• Long-term: Held for 12 months or more.
- Valuation Rules:
- Cost of Acquisition:
– Acquired on/before 31-01-2018 → Higher of actual cost or lower of FMV (31-01-2018) and sale consideration.
– Acquired after 01-02-2018 → Actual cost.
- STT Requirement: STT must be paid at acquisition and transfer (with exceptions for IFSC transactions in foreign currency).
📊 Units of Equity-Oriented Mutual Funds
- Holding Period:
• Short-term: Held for less than 12 months.
• Long-term: Held for 12 months or more. - Valuation Rules:
• Cost of Acquisition: Actual purchase price.
• STT Requirement: STT must be paid at transfer for concessional tax treatment.
🔹 Tax Rates on Capital Gains
AY 2025-26 vs AY 2026-27
| Asset Type | AY 2025-26 | AY 2026-27 |
| Immovable Property (LTCG) | If sold before 23-07-2024: 20% with indexation
If sold on or after 23-07-2024: 12.5% without indexation (20% with indexation optional available if acquired before 23-07-2024, if beneficial) |
12.5% without indexation (20% with indexation if acquired before 23-07-2024, if beneficial) |
| Immovable Property (STCG) | Slab rates | Slab rates |
| Equity Shares (STCG)/ Mutual Fund Units- Equity oriented (STCG) | If sold before 23-07-2024: 15%
If sold on or after 23-07-2024: 20% |
20% |
| Equity Shares (LTCG)/ Mutual Fund Units- Equity oriented (LTCG) | If sold before 23-07-2024: 10%
If sold on or after 23-07-2024: 12.5% Exemption: ₹1,25,000 |
12.5%
Exemption: ₹1,25,000 |
🔹 Exemptions
- Sections 54 to 54GB:
• Reinvestment in residential property, agricultural land, bonds, or shares.
• Specific timelines and conditions must be met. - Special Exemptions:
• Section 10(37): Compulsory acquisition of urban agricultural land.
• Section 10(37A): Andhra Pradesh land pooling schemes.
🔹 Key Changes from AY 2025-26 to AY 2026-27
- Immovable Property: LTCG rate changed to 12.5% without indexation; grandfathering provision allows 20% with indexation for assets acquired before 23-07-2024.
- Equity Shares & Mutual Funds: STCG rate increased to 20%; LTCG rate increased to 12.5% with threshold exemption raised to ₹1,25,000.
- Indexation Benefit: Abolished for most assets, except grandfathering for immovable property acquired before 23-07-2024.
✅ Conclusion
Capital gains taxation has undergone a major shift in AY 2026-27, with simplified rates and reduced reliance on indexation. While immovable property gains now face a lower flat rate of 12.5%, securities taxation has moved to slightly higher concessional rates with enhanced threshold exemptions.
Taxpayers should carefully evaluate:
• Holding periods to determine STCG vs LTCG.
• Valuation rules for cost of acquisition and improvement.
• Grandfathering provisions for immovable property and securities.
• Exemptions under Sections 54 to 54GB to minimize liability.
By understanding these changes, taxpayers can plan better and ensure accurate ITR filing under the new regime.
For more information, please feel free to connect with us on info@camittal.com or 9096623634.
Disclaimer: This blog is for educational purposes only and should not be considered professional accounting, tax, or legal advice. Please consult a qualified professional before making financial decisions.
BLOG BY: Mittal & Co.