The taxation of capital gains has undergone structural simplification under the new Income Tax Act, 2025, effective from FY 2026-27. While the tax rates largely remain unchanged compared to FY 2025-26, there has been a significant reorganization of section numbers and rationalization of provisions. One of the most notable shifts is the movement towards a uniform 12.5% long-term capital gains rate without indexation, with limited exceptions. This article provides a clear, section-wise comparison of capital gains taxation under the old and new regimes, helping taxpayers and professionals understand the practical implications and compliance requirements.
🔹 1. Equity Shares / Equity Mutual Funds / Business Trust
| Particulars | Old Act | New Act | Conditions | Tax Rate |
|---|---|---|---|---|
| STCG | Sec 111A | Sec 196 | STT paid | 20% |
| LTCG | Sec 112A | Sec 198 | STT paid | 12.5% |
| Exemption for LTCG | ₹1,25,000 | ₹1,25,000 | — | Exempt upto limit |
🔹 2. Immovable Property (Land/Building)
| Particulars | Old Act | New Act | Conditions | Tax Rate |
|---|---|---|---|---|
| STCG | Slab | Slab | ≤ 24 months | Normal rates |
| LTCG (General Rule) | Sec 112 | Sec 197 | > 24 months | 12.5% (No indexation) |
| Special Option | Sec 112 | Sec 197 | Acquired before 23 July 2024 | Option: 20% (with indexation) OR 12.5% (without indexation) |
Tax Rates on Equity and Debt Mutual Funds
Gains made on the sale of debt funds and equity funds are treated differently. Any fund that invests heavily in equities (more than 65% of their total portfolio) is called an equity fund.
| Funds | STCG | LTCG |
| Debt Funds | Income Tax Slabs | 12.5%* |
| Equity Funds | 20% | 12.5% (exemption of Rs. 1.25 lakhs) |
Note*: Irrespective of the holding period, debt funds acquired after 01/04/2023, the capital gains on sale of such Debt Mutual Funds, market linked debentures and Unlisted Bonds or Debentures are always considered short-term and are taxed at normal slab rates.
In conclusion, the transition from the old Income Tax Act, 1961 to the new Income Tax Act, 2025 is more about simplification than substantive rate changes in capital gains taxation. The emphasis is on reducing complexity, minimizing reliance on indexation, and adopting a more standardized rate structure. However, taxpayers must carefully evaluate specific situations—particularly in the case of immovable property acquired before 23 July 2024, where the option of indexation still plays a critical role. A proper understanding of these provisions will ensure accurate tax planning, compliance, and optimal decision-making under the new framework.
The contents of this article are for general informational purposes only and are intended to provide quick access to tax rate information. Readers are advised to verify the provisions with the Income-tax Act, relevant rules, notifications, and official government sources before making financial decisions.
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