Capital Gains, VDA & Investment Tax Advisory

What is capital gains and investment tax advisory?

When you sell an investment — shares, mutual funds, property, gold, or unlisted shares — the profit is a capital gain, taxed at rates that depend on the type of asset and how long you held it. Virtual digital assets like crypto have their own flat-rate regime.

Advice covers computing the gains correctly, using exemptions and set-offs you're entitled to, timing sales sensibly, paying advance tax, and reporting everything properly in the return.

The key terms

For transfers from 23 July 2024, the main rules for residents are:

Listed shares and equity funds

Long-term (held over 12 months) gains are taxed at 12.5% above ₹1.25 lakh a year. Short-term gains are taxed at 20%.

Property, unlisted shares, gold

Long-term (held over 24 months) gains are taxed at 12.5% without indexation. Individuals and HUFs selling land or buildings acquired before 23 July 2024 can choose 20% with indexation instead.

Debt mutual funds

Units bought on or after 1 April 2023 are taxed at slab rates, whatever the holding period.

Virtual digital assets

Crypto and other VDAs are taxed at a flat 30% on gains, with no deduction except cost and no set-off of losses against other income.

Reinvestment exemptions

Long-term gains can be exempt if reinvested in a house or specified bonds within the time limits, subject to caps.

Set-off of losses

Capital losses can be set off against capital gains, within rules, and carried forward for eight years if the return is filed on time.

Stamp duty value

For property, the stamp duty value can be treated as the sale price if it's higher than the actual price, beyond a tolerance.

Why it matters

Getting capital gains right can make a large difference:

Rates vary widely

The same gain can be taxed at 12.5%, 20%, 30%, or slab rates depending on the asset and holding period.

Exemptions have strict timelines

Reinvestment exemptions only work if deadlines are met — often before the return is due.

Grandfathering and choices

Older property and shares may have special computation rules worth applying correctly.

Advance tax

Tax on large gains is due in the quarter they arise, or interest applies.

AIS reporting

Brokers, registrars, and property registrations report your transactions. Missing them triggers notices.

VDA reporting

Crypto must be reported in a separate schedule, with TDS on transfers reconciled.

Losses

Harvesting losses and carrying them forward needs timely returns.

Who is this for?

Property transactions also involve TDS for the buyer and stamp duty — see our Property Transaction Tax Advisory service for the full picture.

Capital gains rates at a glance

For residents, on transfers from 23 July 2024:

What we'll need from you

Capital gains statements

From brokers and mutual fund registrars.

Purchase records

Purchase dates and costs, especially for older investments.

Property documents

Sale and purchase deeds, improvement costs, and stamp duty values.

VDA records

Exchange statements for crypto trades and TDS deducted.

Reinvestment plans

Any planned house purchase or bond investment.

AIS

To reconcile every reported transaction.

Advice is quoted based on the number and type of transactions.

How we help

Advice usually follows these steps:

1. 1

   Collect transactions

   All sales for the year are collected and matched with AIS.

2. 2

   Classify

   Each is classified by asset type and holding period.

3. 3

   Compute gains

   Gains are computed under the right method, applying choices available for older assets.

4. 4

   Plan exemptions

   Reinvestment options and loss set-offs are worked out, with deadlines.

5. 5

   Pay advance tax

   Advance tax on gains is computed for the right quarter.

6. 6

   Report

   Gains are reported in the correct schedules, including VDA and foreign assets.

After the sale

A few things to keep in mind:

Meet reinvestment deadlines

Complete the reinvestment within the time allowed, or deposit in the capital gains account scheme before the return due date.

Hold the new asset

Selling the reinvested asset too soon can reverse the exemption.

Keep records

Keep purchase and sale documents for as long as they may be needed.

Carry forward losses

File on time to carry losses forward.

Watch TDS on property

Buyers deduct TDS on property purchases; make sure it reflects in your credit.

Plan the next sale

Consider holding periods and the annual exemption before selling.

Benefits and responsibilities