Why July 23, 2024 is an important date to keep in mind while filing Capital Gains Tax in ITR 2025

Starting July 23, 2024, the way capital gains—both long-term and short-term—are calculated and taxed has changed.

If you sold a house, plot of land, or even shares during the financial year 2024–25, there’s one date you need to pay close attention to while filing your income tax return (ITR) in 2025 — July 23, 2024.

This isn’t just another date in the calendar. It’s the cut-off that determines whether your capital gains will be taxed under the old rules or the new structure introduced by the Finance (No. 2) Bill, 2024. Starting July 23, 2024, the way capital gains—both long-term and short-term—are calculated and taxed has changed. And that change could affect how much tax you pay, and whether you can use indexation benefits.

For starters, the holding period to determine whether an asset qualifies for long-term capital gains (LTCG) has been simplified. It’s now just 1 year for listed securities, and 2 years for all other capital assets.

Let’s say you sold a house before July 23, 2024. Under the older tax rules, any profit you made from that sale, if it qualified as a long-term capital gain (i.e., you held the property for at least two years), could be taxed at 20% with indexation. That means you could inflate the purchase price of the property based on inflation, reducing the gain and thus your tax liability.

Now imagine a friend of yours sold a similar property after July 23, 2024 -- just a few months later. Since the sale happened after July 23, the new rule kicks in: the capital gains will be taxed at a flat 12.5%, but without indexation- while the rate seems lower, they can't adjust for inflation. However, after the Budget, following public feedback, the government provided leeway to those who bought a property before July 23, 2024, but sold it on or after July 23. They were given the option to choose between paying a 20% tax with indexation or a 12.5% tax without indexation, as the tax burden could be significant for properties held over a long period without the benefit of indexation.

Interestingly, the tax rate is the same for both Residents and Residents but Not Ordinarily Residents (RONR). However, for Non-Resident Indians (NRIs), long-term capital gains from selling house property will be taxed at a flat 12.5% on the entire gain, regardless of when the property was purchased. "The 20% option with indexation is available only to resident individuals and HUFs," says Balwant Jain, a Mumbai-based chartered accountant. Moreover, irrespective of your residential status, the STCG tax will be calculated as per the income tax slabs applicable to your income.

This new structure isn’t just for real estate. If you sold shares or equity mutual funds before July 23, 2024, your long-term gains (on assets held for over one year) would be taxed at the previous 10% rate beyond the Rs 1 lakh exemption. But if you sold them on or after July 23, you’ll be taxed at 12.5% flat, although the government now allows a slightly higher exemption of Rs 1.25 lakh for these investments.

Short-term capital gains on listed equities also see a change. Earlier, they were taxed at 15%, but for transactions after July 23, the rate goes up to 20%.

What this means is that the date of sale becomes a deciding factor in your tax liability. It’s not just about the kind of asset or how long you held it anymore -- it’s also about whether you sold it before or after July 23. Look at the table How to report Capital Gains in ITR 2025 for equities, debt and gold in FY 2024-25 to understand how other capital assets will be taxed.

Similarly, for gold, the taxation rules have changed. The holding period for gold is reduced from 3 years to 2 years, and the nature and rate of taxation will be calculated the definition applied as per the selling date. "Similarly taxation of debt funds and market linked debentures acquired prior to 1st April, 2023 will become long term and taxed at 12.50% after two years," says Jain.

When it’s time to file your ITR for FY 2024–25, the first thing you should do is look at the date of sale. If your transaction happened before July 23, you might have the choice between the old and new tax structures. But if it occurred on or after that date, you will need to follow the new flat rate rules.

So yes, circle July 23, 2024, in red. It’s not a deadline—but it might just be the line that divides a lower tax bill from a higher one.