What are Long-Term Capital Gains (LTCG)?#
Long-Term Capital Gains (LTCG) are profits earned from selling capital assets that have been held for a specified holding period — making them eligible for lower tax rates than short-term gains.
The holding period that qualifies as "long-term" differs by asset type.
LTCG Holding Period (Post-Budget 2024)#
| Asset Type | Long-Term if Held > |
|---|---|
| Listed equity shares, equity MFs, Units of business trust | 12 months |
| Unlisted shares | 24 months |
| Immovable property (land, building) | 24 months |
| Bonds, debentures | 12 months (for listed); 36 months (unlisted) |
| Gold, other assets | 24 months |
| Debt mutual funds (post-April 2023) | Taxed as per slab (no LTCG benefit) |
LTCG Tax Rates (AY 2026-27)#
| Asset Type | LTCG Tax Rate | Indexation? |
|---|---|---|
| Listed equity / equity MFs | 12.5% (gains > ₹1.25L exempt) | ❌ No |
| Unlisted shares | 12.5% | ❌ No (post-Budget 2024) |
| Property (post-July 23, 2024) | 12.5% | ❌ No |
| Property (acquired before July 23, 2024) | 20% with indexation OR 12.5% without | Choose lower |
| Gold | 12.5% (post-Budget 2024) | ❌ No |
Note: Budget 2024 removed indexation for most assets effective July 23, 2024.
The ₹1.25 Lakh Exemption (Listed Equity)#
For listed equity shares and equity mutual funds, LTCG up to ₹1,25,000 per year is exempt. Tax applies only on gains exceeding this threshold.
Example:
- LTCG from equity MFs: ₹2,00,000
- Exemption: ₹1,25,000
- Taxable LTCG: ₹75,000
- Tax at 12.5%: ₹9,375 + cess
LTCG on Property — Indexation Impact#
For property acquired before July 23, 2024, you can choose between:
- Old method: 20% tax with Cost Inflation Index (CII) adjustment (reduces effective gain)
- New method: 12.5% tax without indexation
Choose whichever results in lower tax. A CA can calculate this for you.
How to Report LTCG in ITR#
- Use ITR-2 (if no business income) or ITR-3 (with business income)
- Schedule CG (Capital Gains) in the ITR
- Equity LTCG enters in "112A" section
- Property LTCG enters in "112" section
- Include brokerage and transfer costs to reduce gains