Long-Term Capital Gains(LTCG): Tax Rates, How to Calculate, Exemptions and Examples

Capital gains arising from For more info the transfer of long-term capital assets is referred to as long-term capital gains. The long-term capital gains taxation is divided into two sections: Section 112 and Section 112A.

Section 112A applies in the case of the following assets:

Equity share in a listed company
Unit of equity-oriented fund
Unit of business trust
Section 112 applies to all other cases of long-term capital gains not covered under Section 112A.

Long-term Capital Gain Tax Rate
The long-term capital gain tax rate varies depending on the type of asset being sold. The tax rates applicable for different types of assets are as follows:

Listed equity shares and equity-oriented mutual funds:
Long-Term Capital Gains (LTCG) that exceed Rs. 1.25 lakh in a financial year are subject to a 12.5% tax rate from 23rd July, 2024. For transfers made up to 22nd July, 2024, the tax rate of 10% will be applicable.
Other assets (such as real estate, land, unlisted shares, etc.):
For Transfers made on or after 23rd July, 2024 (except for land and building) – LTCG is taxed at 12.5% without taking the indexation benefit.
For Transfers made on or before 22nd July, 2024 – LTCG is taxed at 20% after taking the indexation benefit.
In case of transfer of land or buildings acquired before July 23, 2024, taxpayers have the option to pay tax at either a rate of 12.5% without indexation benefits or 20% with indexation benefits.

Long-term Capital Gain Tax on Shares
A long-term capital gain arises from selling shares held for over 12 months. It is determined by subtracting the purchase price from the sale price of shares held for over a year. The gain reflects the investor’s net profit from the sale of the shares.

Listed equity shares qualify as long-term capital assets if held for at least 12 months. In contrast, gains from unlisted equity shares are categorised as long-term only if the holding period is a minimum of 24 months.

Long-term Capital Gain Tax on Property
A long-term capital gain arises from selling property held for more than 24 months. As mentioned above the rates will be 20% for transfer made on or before 22nd July, 2024 after indexation benefit. For subsequent transfers, the tax rate shall be 12.5% without the indexation benefit. There are certain exemptions available which will further reduce your LTCG chargeable to tax.

With further benefit, in case of a sale of land and building made after 23rd July, 2024, taxpayer will have the option to pay tax at 20% with indexation benefit and at 12.5% without indexation benefit if acquisition of such land/building has been made on or before 22nd July, 2024.