LTCG Tax 2025-26 — Long Term Capital Gains Rate, Exemption & Section 54
Updated: 3 June 2026 | Budget 2024 Rates | Section 112A & 112 | Income-tax Act, 2025
Long Term Capital Gains (LTCG) tax for FY 2025-26: Equity shares/MF: 12.5% above ₹1.25L exemption (held ≥12 months). Property: 12.5% without indexation (held ≥24 months). Gold/bonds: 12.5% without indexation (held ≥24 months). Section 54 exemption available on property sale reinvestment. LTCG above ₹1.25L is taxed separately — Section 87A rebate does not apply to LTCG under 112A.
12.5%
LTCG tax rate on equity shares, equity MF, and property (Budget 2024 revision).
First ₹1.25L LTCG on equity: exempt. No indexation for any asset from July 23, 2024 onwards (property: choice for pre-July 24 assets).
First ₹1.25L LTCG on equity: exempt. No indexation for any asset from July 23, 2024 onwards (property: choice for pre-July 24 assets).
LTCG Tax Rates — All Asset Types (FY 2025-26)
| Asset | Holding for LTCG | Tax Rate | Indexation | Exemption |
|---|---|---|---|---|
| Listed equity shares | 12+ months | 12.5% (Section 112A) | No | ₹1.25L/year |
| Equity mutual funds | 12+ months | 12.5% (Section 112A) | No | ₹1.25L/year (combined) |
| Residential house property | 24+ months | 12.5% or 20% (choice for pre-Jul 24) | Yes (20% option only) | Section 54, 54EC, 54F |
| Commercial property | 24+ months | 12.5% | No | Section 54EC |
| Unlisted shares | 24+ months | 12.5% | No | — |
| Debt mutual funds (post Apr 2023) | Any | Slab rate | No | — |
| Gold / jewelry | 24+ months | 12.5% | No | Section 54F |
| Bonds / debentures | 12+ months (listed) / 36+ (unlisted) | 10%/12.5% | No | — |
LTCG Exemptions — Key Sections
| Section | What It Covers | Investment Required | Lock-in |
|---|---|---|---|
| Section 54 | LTCG on residential house property | Buy/construct new residential house within 2/3 years | 3 years |
| Section 54EC | LTCG on any long-term capital asset | Invest up to ₹50L in NHAI/REC bonds within 6 months | 5 years |
| Section 54F | LTCG on any asset (not house property) | Invest net sale proceeds in house property within 1/2/3 years | 3 years |
| Section 54B | LTCG on agricultural land | Buy new agricultural land within 2 years | 3 years |
| Section 54GB | LTCG on residential property | Invest in eligible start-up before filing ITR | 5 years |
Frequently Asked Questions
What is the LTCG tax rate on shares and equity mutual funds?
LTCG (Long Term Capital Gains) on listed equity shares and equity mutual funds (held for 12+ months) is taxed at 12.5% under Section 112A of the Income-tax Act 2025. The first ₹1.25 lakh of LTCG per year is exempt. Above ₹1.25L: tax at 12.5% (no indexation). Plus 4% H&E cess = effective 13% on gains above ₹1.25L. These rates were revised in Budget 2024 (was 10% with ₹1L exemption).
What is LTCG on property sale?
LTCG on property held for 24+ months is taxed at 12.5% under Section 112 — without indexation (Budget 2024 removed indexation benefit). Earlier, property LTCG was at 20% with indexation. From 23 July 2024, property sellers can choose: 12.5% without indexation OR 20% with indexation (for property acquired before 23 July 2024, by choice). New purchases: only 12.5% without indexation. Exemption available under Section 54 (reinvest in new property).
What is the LTCG exemption under Section 54?
Section 54: If you sell a residential house property (LTCG) and invest the gains in a new residential property in India (within 1 year before or 2 years after sale, or 3 years for under-construction), the LTCG is exempt. The exemption is limited to the amount invested. Section 54EC: Invest up to ₹50L in NHAI/REC bonds within 6 months of sale to exempt LTCG — bonds locked for 5 years. Section 54F: For sale of other long-term capital assets (not property) with reinvestment in house.
How to calculate LTCG on shares?
LTCG on equity shares calculation: (1) Total sale value of shares held ≥12 months; (2) Less: Cost of acquisition (actual cost for shares bought after Jan 31, 2018; Grandfathering: for shares bought before Feb 1, 2018, cost = higher of actual cost OR fair market value on Jan 31, 2018); (3) LTCG = Sale value - Cost. (4) First ₹1.25L LTCG: exempt. (5) Balance × 12.5% = tax. Losses can be offset against other LTCG in same year or carried forward 8 years.
Is LTCG on mutual funds and shares added to total income?
LTCG under Section 112A (equity shares/equity MF) is a special rate income — taxed at flat 12.5% and NOT added to slab-rate income. The Section 87A rebate (₹25,000) cannot be used against this tax. Example: Salary ₹11L (zero slab tax after 87A rebate) + LTCG ₹3L (₹1.75L taxable at 12.5% = ₹21,875 tax) → Total tax = ₹21,875 + 4% cess. The ₹11L salary does not affect the LTCG computation.
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