Your CAMS statement shows a tidy profit, but how much of it actually reaches your bank account depends entirely on what you bought, when you bought it, and how long you held it. Here is a clean, current breakdown of how equity shares, mutual funds, and ETFs are taxed after the Budget 2024 overhaul — and what changes under the Income Tax Act, 2025.

Most investors discover the tax rules only when the redemption hits their account and the number looks smaller than the app promised. The rules changed sharply on 23 July 2024, and if your last mental model is "10% LTCG above ₹1 lakh," it is already outdated. Here is where things actually stand.

The three buckets that decide your tax

Every listed investment falls into one of three tax buckets, and the bucket — not the product name — decides the rate.

• Equity-oriented: Direct equity shares (listed), equity mutual funds (≥65% in Indian equities), equity ETFs, arbitrage funds.
• Specified / debt-like: Debt mutual funds, gold ETFs, international ETFs, fund-of-funds — broadly, any fund with <35% in Indian equities purchased on or after 1 April 2023.
• Other: Unlisted shares, hybrid funds with 35–65% equity, gold funds bought before April 2023, etc.

The rate you pay depends on which bucket the instrument sits in and how long you held it before selling.

Equity shares, equity mutual funds and equity ETFs

For anything equity-oriented sold on or after 23 July 2024:

What this means in practice: the STCG rate has jumped from 15% to 20%, and the LTCG rate from 10% to 12.5%. The exemption threshold on LTCG has been raised from ₹1 lakh to ₹1.25 lakh per financial year — a small consolation. STT must have been paid on the sale for these concessional rates to apply. These provisions sit under Section 111A (STCG) and Section 112A (LTCG) of the Income Tax Act, 1961, and carry forward into the Income Tax Act, 2025 with equivalent treatment.

For sales before 23 July 2024 in the same financial year, the old rates (15% STCG / 10% LTCG) apply. Your broker's tax P&L should split the two periods automatically — verify it.

Debt mutual funds — the bucket that lost its indexation

This is where most investors get caught. For debt mutual fund units purchased on or after 1 April 2023, there is no LTCG benefit at all. The entire gain, regardless of holding period, is taxed at your slab rate as short-term capital gain under Section 50AA. No indexation, no 12.5%, no ₹1.25 lakh exemption.

For units purchased before 1 April 2023:

• Sold on or after 23 July 2024 and held over 24 months → LTCG at 12.5% without indexation.
• Sold before 23 July 2024 and held over 36 months → LTCG at 20% with indexation (relevant only for old returns / rectifications now).

Practical implication: If you are parking money in a debt fund thinking of the old post-tax edge over an FD, that edge is gone for post-April-2023 investments. The choice between an FD and a debt fund now comes down to liquidity, credit quality, and yield — not tax arbitrage.

ETFs — the rules depend on what the ETF holds

ETFs are treated exactly like the asset class they track, not as a separate category.

The Budget 2024 amendments also restored a partial LTCG benefit for gold and international funds — but only for sales after 1 April 2025 and a 24-month holding period. If you sold a gold ETF in FY 2024–25 before April 2025, it is still slab rate.

Set-off and carry forward — do not leave money on the table

• Short-term capital loss (STCL) can be set off against both STCG and LTCG.
• Long-term capital loss (LTCL) can be set off only against LTCG.
• Both can be carried forward for 8 assessment years, but only if the return is filed on or before the due date under Section 139(1).

A common mistake: booking losses in March to offset gains, but then filing a belated return in December. The carry-forward is lost. File on time.

What changes under the Income Tax Act, 2025

The Income Tax Act, 2025 is in force from 1 April 2026 and governs AY 2026–27 onwards. The rate structure for capital gains carries forward substantially unchanged — 20% STCG and 12.5% LTCG on equity-oriented instruments, slab rate for specified funds. The section numbering has been reorganised (the erstwhile Sections 111A, 112, 112A and 50AA appear in the corresponding Chapter on Capital Gains under the new Act). Because section numbering across published drafts has shown minor discrepancies, always cross-check against the final notified text before quoting a section in a filing.

Your reporting continues in Schedule CG of the ITR, with scrip-wise details required for LTCG under Section 112A. Broker CAMS/KFintech statements provide this data — do not manually key it.

The one takeaway

Match the holding period to the tax rate before you sell, not after. A sale one week short of 12 months costs you an extra 7.5% on an equity trade. On a ₹10 lakh gain, that is ₹75,000 — enough to justify a coffee, a calendar reminder, and a second look at your redemption request.

CA Praneeth Thunuguntla | Thunuguntla & Associates | Income Tax & GST Advisory