Capital Gains Tax is levied on the profit earned from selling capital assets like stocks, property, gold, etc. The tax rate depends on the holding period and type of asset.

Long Term (LTCG): Assets held for >1 year (equity) or >3 years (others)
Short Term (STCG): Assets held for ≤1 year (equity) or ≤3 years (others)
LTCG generally has lower tax rates than STCG.

Indexation adjusts the purchase price for inflation using Cost Inflation Index (CII). It's available for LTCG on property, gold, and bonds, reducing taxable gains.