Sold Shares or Property? What You Must Know About Capital Gains in ITR 2025

The profits arising from the sale of property (movable or immovable ), are called capital gains.

In recent times, the equity market has become the most popular investment option for investments. However, investing in equity indicates potentially high profits as well as losses.

These profits are typically subject to tax under the Income Tax Act and the losses can be carried forward to the future years.

What Are Capital Gains On Shares?

Capital gains are profits from capital assets like investment properties, shares, homes, cars, bonds, stocks and collectibles, among others. This includes almost everything that you own and recorded at the time of depreciation in ITR.

For instance, if you sell a car, then he car is considered a fixed asset or capital asset. The capital gains on selling a car are the 'profit' earned on the capital asset's value.

This profit attracts taxes only if it is used for business purposes. It does not attract tax if it is used for a personal purpose.

Under section 111A of the Income Tax Act, 1961, a 20% tax rate is applicable on short-term capital gain tax on listed equity shares, excluding surcharge + cess. Slab rate will be applicable on other short term assets. As compared to long-term capital gains on shares, short-term capital gains get preferential tax treatment.

A 12.5% long term capital gain tax rate is applicable on long-term capital gain on shares without indexation.

Additionally, investors who wish to determine the levied taxes on long-term gains, the Cost Inflation Index (CII) is a new term they need to know.

The Cost Inflation Index is a number that the Income Tax Department notifies is for tax calculation on long-term gains in a specific financial year.

Capital Gains On Sale Of Property

The profit or gain arising from the sale of property is called a capital gain on property.

This is divided into two categories namely long-term capital gain and short-term capital gain.

For instance, if you sell the property after holding it for more than 24 months, the profit will be classified as long-term capital gains (LTCG).

If the property is sold within 24 months of its acquisition, it is classified as short-term capital gain (STCG).

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