What Budget 2024 Changed
The Finance (No. 2) Act 2024 made sweeping changes to capital gains taxation effective from July 23, 2024. The changes simplified some aspects (uniform LTCG rate) while creating complexity in others (grandfathering provisions, changed holding periods for certain assets, and withdrawal of indexation for real estate).
STCG on listed equities/equity MFs: 20% (from 15%) · LTCG on listed equities/equity MFs: 12.5% (from 10%), with exemption threshold raised to ₹1.25 lakh · Indexation benefit removed for real estate LTCG (with option to use 20% with indexation for assets acquired before July 23, 2024) · Holding period for unlisted shares LTCG: retained at 24 months.
Complete Rate Table — Post July 23, 2024
| Asset Type | STCG Period | STCG Rate | LTCG Period | LTCG Rate |
|---|---|---|---|---|
| Listed equity shares / equity MFs | ≤12 months | 20% | >12 months | 12.5% (₹1.25L exempt) |
| Debt MFs (post Apr 2023) | Any | Slab rate | N/A | Slab rate |
| Unlisted shares | ≤24 months | Slab rate | >24 months | 12.5% (no indexation) |
| Immovable property (res/com) | ≤24 months | Slab rate | >24 months | 12.5% or 20% with index (pre-Jul 24 assets) |
| Gold / silver (physical) | ≤24 months | Slab rate | >24 months | 12.5% (no indexation) |
| Gold ETF / SGBs | ≤12 months | 20% | >12 months | 12.5% |
| REITs / InvITs | ≤12 months | 20% | >12 months | 12.5% |
The Real Estate Indexation Controversy
The removal of indexation for real estate sold after July 23, 2024 was the most controversial aspect of Budget 2024. The government's position: at 12.5% (vs 20% with indexation), the net tax is lower for most sellers. The reality depends on the specific inflation experience of the asset.
For properties acquired before July 23, 2024, sellers have a choice: pay 12.5% on gains computed without indexation, or pay 20% on gains computed with indexation (using the Cost Inflation Index). This choice must be exercised in the ITR filing and the taxpayer should compute both scenarios before filing.
Example: Property bought in 2010 for ₹50 lakh, sold in 2025 for ₹2 crore. Without indexation: LTCG = ₹1.5 crore, tax = ₹18.75 lakh. With indexation (CII 2010=167, 2025=363): indexed cost = ₹108.7 lakh, LTCG = ₹91.3 lakh, tax = ₹18.26 lakh. In this example, the 20% + indexation route is marginally better — but this reverses for properties with lower real returns.
Planning Strategies Post-Budget 2024
1. Equity Portfolio Rebalancing
With STCG rate increased to 20%, the holding period discipline is even more critical for equity investors. Ensure significant positions are held for 12+ months before triggering gains. For losses, STCG loss can offset STCG or LTCG gains; LTCG loss can only offset LTCG gains.
2. Real Estate — Pre vs Post July 23, 2024 Analysis
For all pre-July 2024 assets, prepare the indexation vs no-indexation computation before filing. The choice is irrevocable once the ITR is filed.
3. Section 54 / 54F Reinvestment
The Section 54 (residential property) and Section 54F (non-residential capital asset) exemptions remain available and their thresholds are now more attractive given the higher absolute gains under the new regime. Maximum exemption under these sections combined: ₹10 crore (cap introduced from AY 2024-25).
4. Tax Loss Harvesting Before March 31
With listed equity LTCG exempt up to ₹1.25 lakh per year, a systematic sell-and-rebuy of equity positions with unrealised LTCG of up to ₹1.25 lakh each March 31 resets the cost base tax-free — effectively providing annual tax-free compounding of the exemption.
Common Errors in Capital Gains Reporting
- Netting long-term and short-term gains in the ITR (must be reported separately in Schedule CG)
- Forgetting to report gains from redemption of SIPs held for different periods (each unit has its own acquisition date)
- Not reporting equity LTCG above ₹1.25 lakh — the broker's Form 16B shows gross gains, but the net taxable gain after the exemption must be computed and reported
- Ignoring TDS on immovable property sale by NRI (Section 195) — buyer's obligation, but seller's liability if under-deducted