Long-term capital gain
Also called: long term capital gain, LTCG
Profit from selling listed shares or equity funds held for more than 12 months. Taxed at 12.5 percent on gains above 1.25 lakh rupees a year.
Hold a listed share or an equity mutual fund for more than twelve months and the profit is long-term. The first 1.25 lakh rupees of such gains in a financial year are tax-free, and anything above that is taxed at 12.5 percent plus cess, for sales on or after 23 July 2024. Before that date the rate was 10 percent above 1 lakh.
A long-term loss can be set off only against long-term gains. For shares bought before 1 February 2018, the law lets you count the share’s price on 31 January 2018 as your cost if that is higher than what you paid, a rule known as grandfathering.
Example
Your long-term gains this year add up to 2 lakh rupees. The first 1.25 lakh is exempt, so 75,000 is taxed at 12.5 percent: 9,375 rupees plus 375 of cess.
Watch out
The 1.25 lakh exemption is per financial year, across all your long-term equity gains, not per sale. Spreading sales across two financial years can sometimes let you use it twice.
Learn it properly in
Chapter 3.1: Capital gains tax on Indian shares: STCG, LTCG and the rules after July 2024