Question 1

What is Long Term Capital Gains (LTCG) tax?

Accepted Answer

LTCG is a tax on profits made from selling a capital asset that you have held for more than a specified period. For equity shares and equity mutual funds, the qualifying period is 12 months. For debt bonds and property, it is 24 months. Profits from short-term holdings are taxed as Short Term Capital Gains (STCG).

Question 2

What is the LTCG rate for equity after Budget 2024?

Accepted Answer

From 23 July 2024, LTCG on listed equity shares and equity mutual funds is taxed at 12.5% (previously 10%). The ₹1.25 lakh annual exemption continues to apply, and there is no indexation benefit. STCG is taxed at 20% (previously 15%).

Question 3

What is the ₹1.25 lakh LTCG exemption on equity?

Accepted Answer

You can earn up to ₹1.25 lakh per financial year in long-term capital gains from equity without paying any tax. Gains above ₹1.25 lakh are taxed at 12.5%. So if you book ₹2 lakh in equity LTCG, only ₹75,000 is taxable.

Question 4

How are debt mutual funds taxed after April 2023?

Accepted Answer

Debt mutual funds purchased after 1 April 2023 no longer get LTCG treatment. All gains are added to your income and taxed at your income slab rate, regardless of how long you held them. This makes debt MFs less tax-efficient than before for investors in higher slabs.

Question 5

Can I set off capital losses against capital gains?

Accepted Answer

Yes. Short-term capital losses can be set off against both short-term and long-term gains. Long-term capital losses can only be set off against long-term gains. Unabsorbed capital losses can be carried forward for up to 8 years.

LTCG Tax Calculator

Frequently asked questions

LTCG Tax Calculator

Frequently asked questions