What Budget 2024 changed about capital gains

Effective 23 July 2024, the Union Budget reshaped capital gains tax more than any single Budget had in years — higher rates on equity, indexation removed for most assets, and a simpler two-bucket holding-period system in place of three. Anyone selling an investment today is working under rules that look meaningfully different from what applied just a couple of years earlier.

What actually changed, in one pass

Listed equity shares and equity mutual funds had their rates raised on both sides: long-term gains (Section 112A) moved from 10% to 12.5%, and short-term gains (Section 111A) moved from 15% to 20%. The annual exemption on long-term equity gains grew too — from ₹1,00,000 to ₹1,25,000 — a partial offset, but nowhere near enough to cancel out the rate increase on larger gains.

Indexation — adjusting the purchase price upward for inflation before calculating the taxable gain — was removed for most assets sold on or after the cutoff, replaced with a flat 12.5% rate on the unadjusted gain. Holding periods were simplified at the same time: instead of three separate thresholds for different asset classes, there are now just two — 12 months for listed equity, 24 months for everything else covered here (property, gold, unlisted shares, most debt funds).

The same gain, before and after

Take a ₹5,00,000 long-term gain on listed equity, taxed under each set of rules:

Short-term equity gains moved by even more in percentage terms. A ₹2,00,000 short-term gain cost ₹31,200 (15% plus cess) under the old rate, and costs ₹41,600 (20% plus cess) now — ₹10,400 more, with no exemption to offset any of it on the short-term side either way.

Property kept one carve-out the rest lost

Before the change, long-term property gains were taxed at 20% with indexation as the standard approach — inflating the purchase price using the Cost Inflation Index before computing the gain, which could shrink the taxable amount substantially on older holdings. The new default is 12.5% on the unadjusted gain, no indexation, for every property sold on or after the cutoff.

Property is the one asset here that kept a transitional choice: if it was acquired before the cutoff, the seller can still pick whichever of the two methods — 12.5% without indexation, or 20% with it — comes out cheaper. Gold, unlisted shares, and debt funds got no equivalent grandfathering; they simply moved to the new flat rate. Exactly when that indexation choice actually saves money is its own calculation, worth working through separately with real purchase and sale years.