LTCG Tax
Long-Term Capital Gains, or LTCG, refers to profit earned from selling an asset held for longer than a specified holding period. India taxes LTCG differently across asset classes, with the most prominent being equity LTCG at 10% above ₹1 lakh per year. Understanding LTCG rules is essential for tax-efficient investing in equity, mutual funds, debt, gold and real estate.
Key takeaways:
- LTCG applies if you hold the asset longer than the prescribed period — 12 months for listed equity/equity MF, 24 months for property and unlisted shares, 36 months for debt MFs (older units).
- Equity/equity MF LTCG taxed at 10% (above ₹1 lakh annual exemption).
- Property LTCG at 20% with indexation; new rules also offer a 12.5% option without indexation.
- Debt MF gains after 1 April 2023 are fully taxed at slab rate, regardless of holding period.
- Bring-forward of LTCG losses allowed against future capital gains for 8 years.
Holding-period thresholds
| Asset | LTCG holding period |
|---|---|
| Listed equity / equity MF | 12 months |
| Unlisted shares | 24 months |
| Immovable property | 24 months |
| Debt MF (older units) | 36 months |
| Gold / sovereign gold bonds | 24 months |
Equity LTCG — most important for investors
On listed equity shares and equity mutual fund units sold after 12 months, gains above ₹1 lakh per financial year are taxed at 10% (plus surcharge and cess). The ₹1 lakh exemption is per individual, per year. Use this exemption proactively — sell and re-buy small lots near year-end if your overall portfolio allows.
Property LTCG
For immovable property held over 24 months, you have two options (from FY2024–25):
- 20% on indexed gains (cost adjusted for inflation via CII).
- 12.5% on un-indexed gains (simpler, may benefit some).
You can also reinvest under Sections 54 / 54EC / 54F to defer tax. Choose the route that minimises tax based on your situation.
Debt mutual funds — the 2023 change
For units bought on or after 1 April 2023, debt mutual fund gains are taxed at slab rate regardless of holding period — there is no LTCG benefit. Older units retain the previous LTCG treatment (20% with indexation after 36 months). This is a major change for debt-fund investors and has shifted preferences toward Target Maturity Funds and tax-efficient alternatives.
Loss set-off and carry-forward
- Long-term capital losses can be set off only against long-term capital gains.
- Short-term capital losses can be set off against both long-term and short-term gains.
- Unutilised losses can be carried forward for 8 assessment years.
- File ITR by due date to retain carry-forward eligibility.
Smart LTCG tax planning
- Use the ₹1 lakh equity LTCG exemption each year — “tax loss harvesting in reverse”.
- Stagger redemptions across financial years to spread gains.
- Pair LTCG harvesting with rebalancing for two benefits in one transaction.
- Track holding period dates carefully — selling one day too early flips the asset into short-term territory.
- Document the cost basis for inherited or gifted assets to calculate gains correctly.
Frequently asked questions
Is the ₹1 lakh equity LTCG exemption per holding or per total?
Per individual per financial year, across all equity/equity-MF gains combined.
Are SGBs taxed on maturity?
Sovereign Gold Bonds redeemed at maturity are entirely tax-exempt; sold before maturity, normal LTCG/STCG rules apply.
Do NRIs pay LTCG tax in India?
Yes, on Indian-sourced gains. TDS applies; treaty benefits may reduce overall tax burden.
How is LTCG reported?
On Schedule CG of the ITR. Brokers and AMCs provide capital-gain statements for the year.
