LTCG: Long-Term Capital Gains Tax in India
LTCG (Long-Term Capital Gains) is the tax on profits from sale of capital assets held longer than the prescribed holding period, with rates and exemptions varying by asset class under the Income Tax Act 1961.
Holding periods (post Finance Act 2024, effective July 23, 2024): listed equity shares, equity mutual funds, and listed business trusts → 12 months for LTCG. Unlisted shares, immovable property, gold, debt mutual funds, debentures → 24 months. Other movable assets and listed bonds → 12 months. Before this rule, the periods varied (24 vs 36 vs 12 months).
Tax rates (FY 2025-26 onwards): listed equity / equity MFs / listed business trusts → 12.5% on gains exceeding ₹1.25 lakh per FY (no indexation). STT-paid transactions only. Immovable property, gold, debt MFs, unlisted shares → 12.5% without indexation, OR for property bought before July 23, 2024 the resident has option of 20% with indexation. Foreign assets → 12.5% without indexation.
Exemptions: Section 54 (residential property reinvestment), Section 54F (capital asset → residential property), Section 54EC (₹50 lakh in NHAI/REC/IRFC bonds, 5-year lock-in). Carry forward of long-term capital losses for 8 assessment years, set-off only against LTCG. Indexation removed for most asset classes from July 2024 except resident-owned pre-July-2024 property.
Richify Tip
The ₹1.25 lakh exemption on equity LTCG is per FY per individual. Couples can each utilise separately. Booking LTCG up to ₹1.25 lakh and reinvesting (tax harvesting) is a legal optimisation. The exemption was ₹1 lakh before July 2024 — increased to ₹1.25 lakh in Budget 2024.
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