Capital Gains Tax on WebNotes

Capital gains tax in India

Sat, 16 May 2026 00:00:00 +0000

Capital gains tax in India is the levy imposed on the profit arising from the transfer of a capital asset, governed principally by Chapter IV-E (Sections 45 to 55A) of the Income Tax Act, 1961. The tax applies to a broad spectrum of asset classes including listed equity shares, mutual fund units, debt instruments, unlisted shares, immovable property, bullion, and other capital assets, with rates and holding-period thresholds varying by asset class and by the period of holding. The regime has been substantially restructured by the Finance (No. 2) Act, 2024, which standardised the long-term capital gains (LTCG) rate at 12.5 per cent across asset classes, raised the LTCG exemption for listed equity and equity-oriented mutual funds from Rs 1 lakh to Rs 1.25 lakh, abolished indexation for most asset classes, and rationalised the holding-period thresholds.

Debt mutual fund indexation removal, Finance Act 2023

Tue, 12 May 2026 00:00:00 +0000

The Finance Act 2023 amended the Income Tax Act, 1961, to remove the indexation benefit and the concessional long-term capital gains (LTCG) tax rate of 20 percent that had previously applied to gains from debt mutual fund schemes held for more than 36 months. With effect from 1 April 2023 (for transactions on or after that date), capital gains from specified debt mutual fund schemes are taxed as short-term capital gains at the investor’s applicable income tax slab rate, irrespective of the holding period. This change fundamentally altered the after-tax return profile of debt mutual funds relative to bank fixed deposits and other fixed-income alternatives, and it significantly reduced the attractiveness of debt funds as tax-efficient long-term investment vehicles for investors in the 30 percent income tax bracket.

How to redeem an SGB at maturity

Tue, 12 May 2026 00:00:00 +0000

This guide explains the process of redeeming a Sovereign Gold Bond (SGB) at its 8-year maturity date. SGBs are issued by the Government of India under the SGB Scheme, administered by the Reserve Bank of India (RBI) . Each SGB tranche has a fixed tenor of 8 years from its original issue date. At maturity, RBI redeems the bonds at the prevailing gold price and the capital gains arising from the maturity redemption are exempt from capital gains tax for all holders, including secondary market buyers who hold to maturity.

How to redeem an SGB early (5th-year window)

Tue, 12 May 2026 00:00:00 +0000

This guide explains how to exercise the early-exit option for Sovereign Gold Bonds (SGBs) during the RBI’s designated premature redemption windows. The SGB Scheme allows investors to exit their SGB holdings before the 8-year maturity, but only on specific coupon payment dates starting from the 5th year after the original issue date. This is commonly called the “5th-year window” or the premature redemption window.

Early exit is an important option for investors who no longer wish to hold the SGB to maturity or who need liquidity. However, unlike maturity redemption, early-exit proceeds are not exempt from capital gains tax. The tax implications differ significantly from the 8-year maturity route, making it important to understand both options.