{"id":11268,"date":"2026-04-19T06:54:12","date_gmt":"2026-04-19T06:54:12","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?p=11268"},"modified":"2026-04-16T07:00:02","modified_gmt":"2026-04-16T07:00:02","slug":"ltcg-vs-stcg-tax-on-stocks-rates-rules-how-to-pay-less","status":"publish","type":"post","link":"https:\/\/lemonn.co.in\/blog\/finance\/ltcg-vs-stcg-tax-on-stocks-rates-rules-how-to-pay-less\/","title":{"rendered":"LTCG vs STCG Tax on Stocks in India 2026: Rates, Rules & How to Pay Less"},"content":{"rendered":"
\"LTCG<\/figure>\n\n\n

Sold stocks this year? The tax you pay depends on one number: how many months you held those shares before selling. Hold for more than 12 months – Long-Term Capital Gain (LTCG), taxed at 12.5%. Hold for 12 months or less – Short-Term Capital Gain (STCG), taxed at 20%.<\/p>\n\n\n\n

What Is Capital Gains Tax and When Does It Apply?<\/strong><\/h2>\n\n\n\n

Long-Term vs Short-Term: The 12-Month Rule for Stocks<\/strong><\/h3>\n\n\n\n

For listed equity shares and equity-oriented mutual funds traded on Indian exchanges:<\/p>\n\n\n\n

    \n
  • Held > 12 months: Long-term capital asset \u2192 LTCG<\/li>\n\n\n\n
  • Held <= 12 months: Short-term capital asset \u2192 STCG<\/li>\n<\/ul>\n\n\n\n

    LTCG vs STCG Tax Rates for 2026 (Full Comparison Table)<\/strong><\/h2>\n\n\n\n
    Asset Type<\/strong><\/th>Holding Period<\/strong><\/th>Type<\/strong><\/th>Tax Rate<\/strong><\/th><\/tr><\/thead>
    Listed equity shares<\/td>> 12 months<\/td>LTCG<\/td>12.5% (above Rs.1.25L exemption)<\/td><\/tr>
    Listed equity shares<\/td><= 12 months<\/td>STCG<\/td>20%<\/td><\/tr>
    Equity mutual funds<\/td>> 12 months<\/td>LTCG<\/td>12.5% (above Rs.1.25L exemption)<\/td><\/tr>
    Equity mutual funds<\/td><= 12 months<\/td>STCG<\/td>20%<\/td><\/tr>
    Debt mutual funds (post Apr 2023)<\/td>Any<\/td>Slab Rate<\/td>As per income slab<\/td><\/tr>
    Hybrid funds (>=65% equity)<\/td>> 12 months<\/td>LTCG<\/td>12.5%<\/td><\/tr>
    Property<\/td>> 24 months<\/td>LTCG<\/td>12.5%<\/td><\/tr>
    Gold (physical)<\/td>> 24 months<\/td>LTCG<\/td>12.5%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    What Changed in Budget 2026?<\/strong><\/h2>\n\n\n\n

    Share Buyback Now Taxed as Capital Gains<\/strong><\/h3>\n\n\n\n

    From April 1, 2026, share buyback proceeds are taxed in the hands of the shareholder as capital gains – STCG at 20% or LTCG at 12.5% depending on holding period. Previously the company paid buyback tax and shareholders received proceeds tax-free.<\/p>\n\n\n\n

    LTCG Rate Unchanged at 12.5%<\/strong><\/h3>\n\n\n\n

    Budget 2026 kept the LTCG rate at 12.5% and the exemption at Rs.1.25 lakh. Pre-budget expectations of a rate cut or exemption hike were not met.<\/p>\n\n\n\n

    STT Hike on F&O<\/strong><\/h3>\n\n\n\n

    The STT increase on futures and options does not affect equity delivery investors directly, but it raises trading costs for those who hedge their equity portfolios using F&O instruments.<\/p>\n\n\n\n

    The Rs.1.25 Lakh LTCG Exemption: How to Use It Every Year<\/strong><\/h2>\n\n\n\n

    Grandfathering Rule: No Longer Relevant<\/strong><\/h3>\n\n\n\n

    Until July 23, 2024, a grandfathering provision protected gains accrued before January 31, 2018. That provision was removed in Budget 2024. All LTCG on equity now uses actual purchase price as the cost basis.<\/p>\n\n\n\n

    Strategic Booking: Reset Your Cost Basis Annually<\/strong><\/h3>\n\n\n\n

    If you have long-term equity holdings sitting on unrealised gains of more than Rs.1.25 lakh, consider booking up to Rs.1.25 lakh in gains before March 31 each year – and immediately rebuying the same shares. You pay zero tax on the booked gain, and your new purchase price resets to the current market price.<\/p>\n\n\n\n

    How to Calculate LTCG Tax – Step by Step With Real Numbers<\/strong><\/h2>\n\n\n\n

    Step 1: Determine Holding Period<\/strong><\/h3>\n\n\n\n

    Check your purchase date and sale date. If the gap is more than 12 months (365 days), it qualifies as long-term.<\/p>\n\n\n\n

    Step 2: Calculate Sale Value Minus Cost of Acquisition<\/strong><\/h3>\n\n\n\n

    LTCG = Sale Price – Purchase Price – Brokerage\/STT on Sale. No indexation benefit is available for equity LTCG.<\/p>\n\n\n\n

    Step 3: Apply Exemption and Tax Rate<\/strong><\/h3>\n\n\n\n

    Example: LTCG in the year = Rs.2,00,000. Exemption = Rs.1,25,000. Taxable LTCG = Rs.75,000. Tax = 12.5% x Rs.75,000 = Rs.9,375.<\/p>\n\n\n\n

    How to Calculate STCG Tax – Examples for Stocks<\/strong><\/h2>\n\n\n\n

    STCG Calculation With a Real Portfolio Example<\/strong><\/h3>\n\n\n\n

    Bought 50 shares at Rs.500 on November 1, 2025. Sold at Rs.620 on March 15, 2026 (4.5 months later – short-term). STCG = (Rs.620 – Rs.500) x 50 = Rs.6,000. Tax = 20% x Rs.6,000 = Rs.1,200.<\/p>\n\n\n\n

    The 20% Flat Rate: No Exemption, No Indexation<\/strong><\/h3>\n\n\n\n

    A Rs.1 lakh STCG = Rs.20,000 tax. A Rs.1 lakh LTCG = Rs.0 tax (within exemption limit). The difference is stark – a strong argument for holding equity investments for at least 12 months wherever possible.<\/p>\n\n\n\n

    LTCG and STCG on Mutual Funds (Updated for 2026)<\/strong><\/h2>\n\n\n\n

    Equity Funds (12-Month Rule)<\/strong><\/h3>\n\n\n\n

    Same as direct equity – held over 12 months: LTCG at 12.5% above Rs.1.25 lakh. Held under 12 months: STCG at 20%. The Rs.1.25 lakh exemption is shared across all equity investments (direct stocks + equity funds) – it is a combined annual limit, not per fund.<\/p>\n\n\n\n

    Debt Funds (Slab Rate Regardless of Holding)<\/strong><\/h3>\n\n\n\n

    Debt mutual funds purchased after April 1, 2023 have no long-term benefit. All gains – regardless of holding period – are added to your income and taxed at your applicable slab rate.<\/p>\n\n\n\n

    Hybrid Funds (The 35%\/65% Equity Threshold Rule)<\/strong><\/h3>\n\n\n\n
      \n
    • Equity allocation >= 65%: Taxed like equity funds (12-month LTCG\/STCG rule)<\/li>\n\n\n\n
    • Equity allocation 35%\u201365%: 24-month holding for LTCG at 12.5%; under 24 months is STCG<\/li>\n\n\n\n
    • Equity allocation < 35%: Taxed like debt funds (slab rate, no LTCG benefit)<\/li>\n<\/ul>\n\n\n\n