A separate rate schedule, not the slabs
Gains from selling shares, mutual funds, property or gold are taxed under special flat rates — sections 111A, 112 and 112A — decided by asset class and holding period, not by the income slabs. Since 23 July 2024 the rates are:
| Income type | Short term | Long term | Notes |
|---|---|---|---|
| Listed equity shares, equity mutual funds (STT paid) | 20% | 12.5% above ₹1,25,000 per year | Sections 111A / 112A. Long term means held more than 12 months. |
| Debt mutual funds (bought on or after 1 Apr 2023) | Slab rates | Slab rates (no indexation) | Gains are taxed as ordinary income wherever held. |
| Land or building | Slab rates | 12.5% without indexation | Pre-23-Jul-2024 purchases by individuals/HUFs may elect 20% with indexation, capped at the 12.5% tax saved. |
| Gold and physical assets | Slab rates | 12.5% without indexation | Long term means held more than 24 months. |
The reform also scrapped indexation for most sales in one direction but added a floor in the other: listed-equity long-term gains carry a 1,25,000 exempt base under section 112A, so tax only bites above it.
What this calculator covers — and where the line falls
The income tax calculator follows the slab-rate route deliberately: it computes gross total income from salary, house property and other slab-rate income, applies Chapter VI-A deductions, slabs, the 87A rebate, surcharge and cess. Capital gains sit outside every one of those steps:
- Flat rates under 111A/112/112A never touch the slab table, so a slab estimate cannot absorb them.
- The Section 87A rebate does not apply as an offset against long- or short-term gains, such as those from shares or mutual funds.
- Most Chapter VI-A deductions cannot be set against special-rate gains; a few survive only inside the slab-rate income bucket.
- Losses from this header can be set off only against gains from the same header, never against salary income.
Factoring gains into the same arithmetic would silently promise a rebate or a deduction that the law denies. Keeping the two routes apart means each number the tool prints stays defensible.
How to work around it in practice
- Compute your slab-rate tax here — salary, exemptions, the deductions you genuinely hold. Print or share the link so the figures survive.
- Classify each sale: asset, holding period, acquisition date (before or after 23 July 2024).
- Apply the seat in the table above — flat rates for equity and the 12.5%/20% election for property, slab rates only where the income type says so.
- Report both buckets together in the right form. Gains send a resident salaried filer from ITR-1 to ITR-2, except small 112A gains within the ₹1.25 lakh floor.
- Remember advance tax on a sale falls due on the next instalment date, not at year end.
Frequently asked questions
Why are capital gains not in the income tax calculator?
Because gains are taxed at special flat rates under sections 111A, 112 and 112A, not at the slab rates, and they bypass the Section 87A rebate and most Chapter VI-A deductions. Mixing them into a slab estimate would produce a wrong number. This tool measures the slab-rate part of your tax; use it to size the salary-plus-deductions liability and add gains separately when filing.
What is the ₹1.25 lakh LTCG exemption?
Long-term listed-equity gains under section 112A have a yearly floor of ₹1,25,000 that is effectively exempt: tax at 12.5% applies only to the excess above it. The floor is per person per financial year and does not carry forward if unused. Since AY 2025-26, gains within this floor can even be reported in ITR-1 or ITR-4.
How long must I hold an asset for it to be long term?
Listed equity and equity mutual funds: more than 12 months. Debt mutual funds bought on or after 1 April 2023: always short term. Immovable property and gold: more than 24 months. Anything held for less is short term and taxed at the rates in the table above.
Can loss on shares be set off against other income?
No. Capital losses — short or long term — can be set off only against capital gains. A short-term loss can be set off against both short-term and long-term gains; a long-term loss only against long-term gains. Unabsorbed losses can be carry forward for up to eight assessment years, provided the return is filed by the due date.
Do I need to pay advance tax on capital gains?
The instalment schedule assumes income flows evenly through the year. Gains are recognised only on sale, so the rule is: pay any tax still due on the prevailing instalment date after the sale, or by 31 March when the sale happens later in the year. Missing it attracts section 234C interest on the shortfall.
Indexation is gone — is there any way to soften the tax?
For a resident individual or HUF selling land or a building bought before 23 July 2024, the choice between 20% with indexation and 12.5% without survives, with the outcome never worse than the 12.5% branch computed before the improvement ceiling. Section 54/54EC reinvestment exemptions also still apply, subject to their own caps and windows.