Long Term Capital Gains explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Long-term capital gains (LTCG) on listed shares and equity mutual funds are taxed at a concessional rate with an annual exemption. Here is how it works.
The rules
- Listed shares/equity funds held over 12 months qualify as long-term
- LTCG above ₹1.25 lakh a year is taxed at 12.5%
- No indexation is available on listed equity LTCG
- STT must have been paid on the transaction
Grandfathering
Gains accrued up to 31 January 2018 are grandfathered — the cost is taken as the higher of the actual cost or the fair value on that date, protecting older gains.
Planning
Use the ₹1.25 lakh annual exemption by harvesting gains, and hold for over 12 months to get the long-term rate.
Frequently Asked Questions
What is the LTCG tax on shares?
12.5% on listed equity long-term gains above ₹1.25 lakh a year.
Is there an exemption on LTCG from shares?
Yes — up to ₹1.25 lakh of equity LTCG per year is exempt.
What is grandfathering in LTCG?
Gains up to 31 January 2018 are protected by taking the higher of cost or fair value on that date.
Is indexation available on share LTCG?
No — indexation is not available on listed equity LTCG.
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