The Finance (No. 2) Act 2024 introduced the most significant rewrite of India’s capital gains tax rules in a generation. Effective for transfers on or after 23 July 2024, the new regime simplifies rates but eliminates most indexation benefits. Here’s everything NISM aspirants need to know — applies to V-A, X-A, X-B, XV, XXI-A, XXI-B, and the AIF series.
Why the change
Pre-2024, India had a patchwork of rates across asset classes — 10% LTCG with no indexation on equity, 20% with indexation on debt and property, slab rates on debt MFs (post-1-Apr-2023), special rules for unlisted equity. The 2024 amendment consolidates this.
At a glance: Two rates only — STCG at slab or 20%, LTCG at 12.5% — with a single ₹1.25 lakh equity exemption and minimal indexation.
Equity & equity MF
Holding period
- Short-term: ≤ 12 months
- Long-term: > 12 months
Rates
| Period | Section | Rate |
|---|---|---|
| Short-term | 111A | 20% (up from 15%) |
| Long-term | 112A | 12.5% above ₹1.25 lakh exemption (up from 10% above ₹1 lakh) |
Note the increase in the LTCG exemption — from ₹1 lakh to ₹1.25 lakh per financial year. This applies only to equity LTCG under §112A.
Worked example
You bought ₹2,00,000 of equity MF on 1 March 2023 and sold for ₹4,50,000 on 1 December 2024. Holding period is 21 months — long-term.
- Capital gain = ₹4,50,000 − ₹2,00,000 = ₹2,50,000
- LTCG exemption = ₹1,25,000
- Taxable LTCG = ₹2,50,000 − ₹1,25,000 = ₹1,25,000
- Tax @ 12.5% = ₹15,625 (plus surcharge & cess if applicable)
Debt MF (post-1-Apr-2023)
No change. Debt mutual funds purchased on or after 1 April 2023 are still taxed at slab rates regardless of holding period — there’s no LT classification for them.
Real estate
This is where it gets nuanced. The Finance Act 2024 originally proposed removing indexation for real estate too, but after representations, an option was retained for properties purchased before 23 July 2024.
Property bought before 23-Jul-2024 (long-term)
Choose whichever gives lower tax:
- Option A: 12.5% without indexation (new regime)
- Option B: 20% with indexation (old regime)
Property bought on or after 23-Jul-2024 (long-term, > 24 months)
- Only 12.5% without indexation is available
Worked comparison
You sell a flat in 2025 for ₹1.5 crore. Bought it in 2018 for ₹80 lakh. CII for FY 2018-19 was 280; for FY 2024-25 it is 363.
Option A (no indexation):
- Gain = ₹1,50,00,000 − ₹80,00,000 = ₹70,00,000
- Tax @ 12.5% = ₹8,75,000
Option B (with indexation):
- Indexed cost = ₹80,00,000 × (363 / 280) = ₹1,03,71,429
- Gain = ₹1,50,00,000 − ₹1,03,71,429 = ₹46,28,571
- Tax @ 20% = ₹9,25,714
In this case Option A is lower — pay ₹8.75 lakh. Always run both numbers.
Unlisted equity & non-equity
| Asset | Holding for LT | LT rate | ST rate |
|---|---|---|---|
| Unlisted equity | > 24 months | 12.5% no indexation | Slab |
| Listed bonds | > 12 months | 12.5% | Slab |
| Gold ETF / Sovereign Gold Bonds | > 12 months | 12.5% | Slab |
| Physical gold | > 24 months | 12.5% no indexation | Slab |
Exam tip: Most NISM questions on the new rules will test whether you know the rate (12.5% / 20%), the exemption (₹1.25L only on §112A equity LTCG), and the holding period that triggers LT classification (12 vs 24 months).
Surcharge & cess
For LTCG under §112A and §111A on equity, surcharge is capped at 15% even for ultra-HNI brackets. Health & education cess is 4% on (tax + surcharge).
Common NISM exam traps
- Confusing pre- and post-23-Jul-2024 dates. A sale on 22-Jul-2024 follows old rules; on 23-Jul-2024 follows new rules.
- Forgetting STT condition. §111A and §112A require STT to be paid at the time of sale (and at purchase too in some cases). Without STT, normal slab rates apply.
- Rebate u/s 87A on LTCG. A 2024 ITR-update clarified that 87A rebate is not available against §112A LTCG even if total income is below ₹7 lakh (new regime). Many candidates miss this.
Try it on the calculator
Our LTCG/STCG calculator implements the post-23-Jul-2024 rules exactly — choose holding period, enter buy/sell, and see the tax computed with the right exemption applied. Cross-check with the Taxation Quick Reference which has every relevant section and rate in one card.
Summary cheatsheet
One rule of thumb: Equity = 20% / 12.5% with ₹1.25L exemption · Everything else = slab / 12.5% no indexation · Real estate has the option only if bought before 23-Jul-2024.
This change affects tax questions on V-A, X-A, X-B, XV, XXI-A, XXI-B, and all AIF exams. If your prep material was published before August 2024, double-check every tax calculation.
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