India’s Income Tax Ministry announced on Tuesday that the 2025 Act will replace the 1961 framework effective 1 April 2026, redefining how gains on equities, mutual funds, property and gold are taxed. The change comes as the country now hosts over 23 crore demat accounts and a growing middle‑class that routinely monetises assets.
Under the updated rules, the holding‑period threshold that separates short‑term from long‑term gains is 12 months for listed securities and 24 months for real‑estate, gold and unlisted shares. The law also codifies the first‑in, first‑out accounting for systematic investment plans, meaning each monthly instalment carries its own acquisition date.
The new regime keeps long‑term equity and equity‑mutual‑fund gains taxed at 12.5% and grants an annual Rs 1.25 lakh exemption under Section 112A, but short‑term equity gains are levied at 20% plus cess, while real‑estate and gold gains above the exemption are taxed at a flat 12.5%.
For the average salaried investor, the practical impact is clear: sell units just after the 12‑month mark to shift a chunk of capital gains into the lower bracket, then reinvest to raise the cost basis. A Delhi‑based family, for instance, sold a 20‑year‑old apartment on 28 March 2026 and paid only 5% tax on the Rs 8 lakh gain, thanks to the earlier sale window. The Ministry has launched an online guide to help investors map their sale dates against the new thresholds.