Capital Gains Tax Calculator

How capital gains tax is calculated in India

A capital gain is what you get after subtracting the cost of an asset from what you sold it for. The cost is not just the purchase price: you can also deduct the cost of any improvements you made and the expenses directly tied to the sale, such as brokerage, stamp duty or legal fees.

Whether the gain is long-term or short-term depends on how long you held the asset, and the threshold differs by asset. Listed shares and equity mutual funds turn long-term after 12 months. Property, gold and unlisted shares take 24 months. Debt-oriented mutual funds are a special case under Section 50AA — they are always treated as short-term no matter how long you hold them.

The gain formula: Sale price − (purchase price + cost of improvement + transfer expenses) = capital gain.

Capital gains tax rates for FY 2026-27 (AY 2027-28)

Budget 2026 left capital gains rates and holding periods unchanged, so the structure introduced by the Finance (No. 2) Act 2024 continues to apply. A 4% health and education cess is added on top of every figure below, and surcharge applies if your total income crosses ₹50 lakh.

* If the land or building was acquired before 23 July 2024 and you are a resident individual or HUF, you may instead pay 20% with indexation and take whichever of the two produces the lower tax. The calculator above works out both and applies the cheaper one for you.

The ₹1.25 lakh equity exemption

Long-term gains on listed shares and equity mutual funds are exempt up to ₹1.25 lakh in a financial year. The 12.5% rate applies only to the amount above that. The exemption is per taxpayer per year, not per transaction, so it covers your combined long-term equity gains across all holdings.

This exemption applies only to long-term equity gains under Section 112A. Short-term equity gains are taxed at 20% from the first rupee, and property or gold gains get no equivalent exemption.

Indexation and the Cost Inflation Index

Indexation adjusts what you paid for an asset to reflect inflation, so you are not taxed on gains that are really just rising prices. The adjustment uses the Cost Inflation Index (CII) notified each year by the CBDT.

The formula is: indexed cost = original cost × (CII of the year you sold ÷ CII of the year you bought). For FY 2026-27 the CBDT has notified a CII of 384, up from 376 the previous year.

Indexation was withdrawn for most assets by the Finance (No. 2) Act 2024. It survives in one place: land or building acquired before 23 July 2024, sold by a resident individual or HUF. If that describes you, compute the tax both ways and pay the lower amount.

Source: Income Tax Department, notified CII under Section 48, Explanation (v), as amended by the Finance Act 2026.

Worked example: property bought in 2015-16, sold in 2026-27

Suppose you bought a flat for ₹40,00,000 in FY 2015-16 and sold it for ₹1,00,00,000 in FY 2026-27, paying ₹1,00,000 in brokerage. Because you acquired it before 23 July 2024, you get to choose.

Without indexation: the gain is ₹1,00,00,000 − ₹41,00,000 = ₹59,00,000, taxed at 12.5%, giving ₹7,37,500 plus cess.

With indexation: the indexed cost is ₹40,00,000 × (384 ÷ 254) = ₹60,47,244. The gain becomes ₹1,00,00,000 − ₹1,00,000 − ₹60,47,244 = ₹38,52,756, taxed at 20%, giving ₹7,70,551 plus cess.

Here the 12.5% route is cheaper, so that is what you would pay. Which option wins depends entirely on how much the asset appreciated relative to inflation — for older, slower-growing property, indexation often wins instead. This is why it is worth computing both rather than assuming.

How to reduce capital gains tax legally

Long-term gains on property can be sheltered by reinvesting, and there are three main routes:

• Section 54 — reinvest the gain from a residential house into another residential house, within one year before or two years after the sale, or build within three years.
• Section 54F — reinvest the whole sale consideration from any long-term asset other than a house into a residential house.
• Section 54EC — invest the gain in specified NHAI or REC bonds within six months, capped at ₹50 lakh, with a five-year lock-in.

Beyond reinvestment, you can set off capital losses against gains. Short-term losses offset both short-term and long-term gains; long-term losses can only offset long-term gains. Unabsorbed losses carry forward for eight assessment years, but only if you file your return by the due date — miss the deadline and you lose the carry-forward.

Tax-harvesting is the other lever most investors miss: because the ₹1.25 lakh equity exemption resets every year, deliberately realising gains up to that limit annually converts what would have been a taxable pile into a series of tax-free ones.

Reporting capital gains in your ITR

Capital gains go in ITR-2, or ITR-3 if you also have business or professional income. ITR-1 cannot report capital gains at all, apart from a limited exception for small long-term equity gains, so most people with a share or property sale need to move up a form.

You will need the full transaction-level detail: dates of purchase and sale, cost, sale consideration and expenses for every asset. Your broker's capital gains statement and the AIS on the income tax portal are the two places to reconcile against, and mismatches between them are one of the more common triggers for a notice.

Sources

• Income Tax Department — Notified Cost Inflation Index under Section 48
• Income Tax Department — Capital Gains