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Explained: How Capital Gains Tax Works on Stocks, Mutual Funds, Property, and Gold
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What Happened?
Capital gains tax affects a growing number of Indian investors, including salaried professionals. Understanding the rules can significantly reduce tax liabilities.
Key points
- India has over 23 crore demat accounts, increasing the relevance of capital gains tax.
- Short-term capital gains (STCG) tax rate is 20% for assets held less than 12 months.
- Long-term capital gains (LTCG) tax rate is 12.5% for assets held over 12 months.
- Salaried professionals are increasingly encountering capital gains tax in their financial planning.
- The Rs 1.25 lakh annual LTCG exemption allows tax-free gains for retail investors.
- Real estate transactions can choose between a 12.5% flat rate or a 20% indexed rate.
Key insights
- Effective tax planning can lead to significant savings for investors.
- The shift to the Income-tax Act, 2025 may affect how gains are reported.
- Investors should consider timing their sales to maximize tax benefits.
Why it matters
Understanding capital gains tax is crucial for Indian investors to optimize their returns.
Source
Times of India
