Long Term Capital Gain Tax

Long-term capital gains (LTCG) refer to profits earned from assets held for an extended period over 12 months for listed assets and 24 months for unlisted assets. The LTCG tax rate was increased to 12.5% post-Union Budget 2024, up from 10% previously, for FY 2024-25 (AY 2025-26). Budget 2025 has made no changes to the LTCG tax rate, and the existing rules will continue to apply for FY 2025-26 (AY 2026-27).
INVEST NOW
Long Term Capital Gain Tax Rate for AY 2026-27
INVEST NOW
3 mins read
30-July-2026

Effective from 23 July 2024, a uniform 12.5% tax rate applies to long-term capital gains across most asset classes. Previously, LTCG on listed shares and equity mutual funds was taxed at 10% on gains above Rs. 1 lakh, while most other assets were taxed at 20% with indexation. Under the current rules, equity LTCG is taxed at 12.5% on gains above Rs. 1.25 lakh a year, and other assets at 12.5% without indexation. For land and buildings acquired before 23 July 2024, resident individuals and HUFs can choose the lower of 12.5% without indexation or 20% with indexation. The indexation benefit has been removed for most assets. For land and building sold after July 23, 2024, the tax rate is 12.5% without indexation. If acquired before that date, taxpayers can choose between 12.5% without indexation or 20% with indexation. Assets are generally considered long-term if held for over 24 months, with exceptions like listed securities and equity funds requiring a 12-month holding period.

This article will delve into the details of long-term capital gains, including the tax rates, calculations, exemptions, and examples.

Understanding LTCG taxation on mutual funds can help you plan your investments better. If you're looking to invest in funds with potential tax benefits, you can explore and compare different options. Start your SIP and grow your wealth!


Budget 2026 update: LTCG tax for FY 2026-27

Union Budget 2026 made no change to LTCG rates: the uniform 12.5% rate, the Rs. 1.25 lakh equity exemption, and the 12/24-month holding periods all continue for FY 2026-27. Two related changes to note: proceeds from share buybacks are now taxed as capital gains in shareholders' hands, and STT on commodity futures rises from 0.02% to 0.05%. Separately, the Income Tax Act, 2025 is in force from 1 April 2026 - rates are unchanged, but section numbering and 'Tax Year' terminology replace the older references.

Pro tip

EFFORTLESS investing | FLEXIBLE options | ROBUST growth 
Access diverse Mutual Funds conveniently. 
Exclusively on our digital platform.

MF Pro Tip banner Effortless

What is long term capital gains tax?


Long term capital gains tax is a tax levied on the profits earned from the sale or transfer of certain long term assets, such as stocks, real estate, mutual funds, or other investments. The tax is applicable only when these assets are held for a specific period, typically more than one year, before they are sold.

When you sell your equity shares after holding them for over a year, you can earn long-term capital gains on mutual funds. If your long-term gains exceed Rs. 1.25 lakh, you will need to pay taxes on them. The tax rate for LTCG on mutual funds is 12.5%, and there is no benefit of indexation.



Here are some key points about long term capital gains tax on Mutual Funds:

  • Holding Period: To qualify for long term capital gains treatment, an investor must hold the asset for a minimum period of one year or more in case of equity-oriented funds and three years or more in case of other than equity oriented funds. If the asset is sold before this holding period, the gains are considered short-term and are subject to a different tax rate.
  • Tax Rates: Equity oriented schemes are subject to Long term capital gains tax at the rate of 12.5%* and other than equity-oriented schemes are also subject to LTCG at the rate of 12.5% (previously 20%). * The rates mentioned above are exclusive of cess and surcharge if applicable.
  • Tax Benefits: Governments often provide lower tax rates on long term gains to encourage long term investment.
  • Reporting: Taxpayers are required to report their capital gains on their income tax returns, specifying whether the gains are short-term or long term.

Long term capital gain tax on mutual funds


Long term capital gains in terms of mutual funds typically refer to the profits made on the redemption or sale of mutual fund units held for a duration of more than one year. These gains are subject to taxation, with different rates applied to equity and non-equity mutual funds:

Equity funds

Equity funds are mutual funds designed for investing in equity shares of various companies. They come in two types: tax-saving equity funds and non-tax saving equity funds.

  • Tax-saving equity funds (ELSS)


     ELSS, a type of tax-saving equity fund, imposes a lock-in period of 3 years. During this period, investors cannot sell or transfer their funds, leading to long term capital gain tax obligations.

  • Non-tax saving equity funds


     Unlike tax-saving equity funds, non-tax saving equity funds do not have a lock-in period. Depending on the holding period, they can attract both long term and short-term capital gain taxes. All equity funds are subject to a 12.5% tax on gains above Rs. 1.25 lakh without indexation benefits after 12 months. However, the capital gains exemption limit has been increased to Rs. 1.25 lakh.

For instance, if Mr. Anil invested Rs. 3 lakh in an equity fund on 1/2/17 and sold it on 31/3/2019 for Rs. 4.5 lakh, his capital gain would be Rs. 1.5 lakh. Consequently, a 12.5% tax would be levied on the Rs. 25,000 exceeding the Rs. 1.25 lakh margin.

These mutual funds invest in both equity and debt funds, with more than 65% of the investment towards equity shares or equity-oriented shares. Hence, they attract a similar long term capital gain tax as equity funds.

Debt funds

Debt mutual funds invest in bonds and money-market instruments. Their taxation depends on WHEN you bought the units: for units purchased on or after 1 April 2023, all gains are taxed at your income tax slab rate, regardless of holding period. For units purchased before 1 April 2023 and held over 24 months, gains are taxed at 12.5% without indexation. Example: Ms. Rao bought debt fund units for Rs. 2 lakh in June 2022 and redeems them in August 2026 for Rs. 3 lakh - her Rs. 1 lakh gain is long-term and taxed at 12.5% (Rs. 12,500). Had she bought the same units in June 2024, the entire gain would be taxed at her slab rate.

Debt-oriented balanced funds

These funds reinvest more than 60% of the funds towards debt instruments and are subject to a tax rate of 12.5% without indexation.

It is essential to stay updated with the prevailing tax regulations, as tax rates and rules may change over time.

LTCG tax on ELSS with example

Long-Term Capital Gains (LTCG) tax on Equity Linked Savings Schemes (ELSS) is a tax levied on the profits earned from the sale of ELSS units held for more than one year. ELSS are mutual funds that invest primarily in equity and offer tax benefits under Section 80C of the Income Tax Act, 1961. They have a lock-in period of three years, meaning the investment cannot be withdrawn before three years.

As of the current tax laws in India, LTCG on equity investments, including ELSS, is taxed at 12.5% if the gains exceed Rs. 1.25 lakh in a financial year. This tax is applicable without the benefit of indexation, which means the cost of acquisition is not adjusted for inflation.

Example:

Suppose you invest Rs.1,50,000 in an ELSS on 1st April 2021. After the mandatory lock-in period of three years, you decide to redeem the investment on 1st April 2024. Assume the value of your investment has grown to Rs. 2,10,000.

  1. Cost of Acquisition: Rs. 1,50,00
  2. Redemption Value: Rs. 2,10,000
  3. LTCG: Rs. 2,10,000 – Rs. 1,50,000 = Rs. 60,000

Since the LTCG of Rs.60,000 is less than Rs. 1.25 lakh, it is exempt from tax. If your gains were Rs. 1,45,000 instead, the taxable amount would be Rs. 20,000 (Rs. 1,45,000 - Rs. 1,25,000 exemption), and the tax payable would be Rs. 2,500 (12.5% of Rs. 20,000).

Thus, understanding the LTCG tax implications is crucial for planning investments and optimising returns from ELSS.

You can save up to Rs. 46,800 in taxes with ELSS Funds. Click here to check out the top performing ELSS funds!

Advantages of long-term capital gains tax

The long-term capital gains (LTCG) tax benefits investors who stay invested for more than a year in equity mutual funds or other market-linked assets. The biggest advantage is lower tax rates—only 12.5% on gains above Rs. 1.25 lakh annually—helping investors keep more of their profits.

It also encourages long-term investing, which allows your money to grow through compounding while reducing the risk of reacting to short-term market swings. By holding investments longer, you can benefit from both market growth and better post-tax returns.

For mutual fund investors, understanding LTCG taxation helps in strategic tax planning and aligning investments with future goals like retirement or education. Overall, the LTCG tax structure supports patient investors by offering a fair balance between wealth creation and tax efficiency.

LTCG rates, holding period of various mutual funds after Budget 2025

Asset TypeEarlier rules – Holding periodEarlier rules – LTCGNew rules after Budget 2025 – Holding periodNew rules after Budget 2025 – LTCG
Equity mutual funds> 12 months10% (no indexation)> 12 months12.5% (no indexation); ₹1.25 lakh annual exemption continues; STCG = 20%
Debt mutual funds purchased before Apr 1, 2023> 36 months20% with indexation> 24 months12.5% (no indexation)
Debt mutual funds purchased on/after Apr 1, 2023Always short-termSlab ratesAlways short-termSlab rates (no LTCG benefit)
Domestic equity ETFs> 12 months10% (no indexation)> 12 months12.5% LTCG; STCG 20%
International equity ETFs (listed in India) before Apr 1, 2023> 36 months20% with indexation> 24 months12.5% (no indexation)
International equity ETFs (listed in India) after Apr 1, 2023Always short-termSlab ratesFrom Apr 1, 2025*12.5% (no indexation) or slab if classified as “specified mutual fund”
International equity ETFs (listed outside India)> 36 months20% with indexation> 24 months12.5% (no indexation)
Domestic debt ETFs (purchased before Apr 1, 2023)> 36 months20% with indexation> 24 months12.5% (no indexation)
Domestic debt ETFs (purchased after Apr 1, 2023)Always short-termSlab ratesAlways short-termSlab rates
International debt ETFs (purchased before Apr 1, 2023)> 36 months20% with indexation> 24 months12.5% (no indexation)
International debt ETFs (purchased after Apr 1, 2023)Always short-termSlab ratesAlways short-termSlab rates
Equity-oriented fund of funds> 12 months10% (no indexation)> 12 months12.5% (no indexation); STCG 20%
Other FoFs (before Apr 1, 2023)> 36 months20% with indexation> 24 months12.5% (no indexation)
Other FoFs (after Apr 1, 2023)Always short-termSlab ratesFrom Apr 1, 2025*Slab (if specified MF) or 12.5% if not
International FoFs> 36 months20% with indexationFrom Apr 1, 2025*Slab (if specified MF) or 12.5% if not
Gold mutual funds (before Apr 1, 2023)> 36 months20% with indexation> 12 months12.5% (no indexation)
Gold mutual funds (after Apr 1, 2023)Always short-termSlab ratesFrom Apr 1, 2025*12.5% (no indexation) or slab if specified MF
Gold ETFs (before Apr 1, 2023)> 36 months20% with indexation> 12 months12.5% (no indexation)
Gold ETFs (after Apr 1, 2023)Always short-termSlab ratesFrom Apr 1, 2025*12.5% (no indexation) or slab if specified MF
Aggressive hybrid fund> 12 months10% (no indexation)> 12 months12.5% (no indexation)
Balanced hybrid fund> 36 months20% with indexation> 24 months12.5% (no indexation)
Conservative hybrid fund (before Apr 1, 2023)> 36 months20% with indexation> 24 months12.5% (no indexation)
Conservative hybrid fund (after Apr 1, 2023)Always short-termSlab ratesFrom Apr 1, 2025*12.5% or slab, depending on MF type


*New rates will come into effect from April 1, 2025


Long-term capital gain tax on shares

Long-term capital gains (LTCG) tax on shares applies to profits made from selling equity shares held for more than one year. Under the current tax regime, gains exceeding Rs. 1.25 lakh in a financial year are taxed at a rate of 12.5%. This change aims to provide a uniform tax structure for all financial assets.

Previously, LTCG tax was 10% for gains without indexation and 20% for gains with indexation. However, after the amendments effective from 23 July 2024, the indexation benefit has been removed and the tax rate for long-term capital gains is now uniformly 12.5% for most assets. Investors must factor in these changes when trading shares, mutual funds or other capital assets to optimise their tax outcomes.

Long-term capital gain tax on property

Long-term capital gains (LTCG) tax on property is applicable when a property is sold after being held for more than two years. The gains are calculated as the difference between the selling price and the indexed cost of acquisition, which accounts for inflation. Under the current regime, LTCG exceeding Rs. 1.25 lakh in a financial year is taxed at 12.5%.

The recent Budget 2024 has removed the indexation benefit, simplifying the calculation for taxpayers. Investors must also be aware of the two-year holding period requirement to qualify for LTCG taxation, as this impacts their overall tax planning strategy.

Current holding period rules for long-term capital gains


Asset classLong-term afterLTCG tax (FY 2026-27)
Listed shares, equity mutual funds, ELSS12 months12.5% on gains above Rs. 1.25 lakh/year
Debt funds bought on/after 1 Apr 2023Not applicableSlab rate (all gains)
Debt funds bought before 1 Apr 202324 months12.5% without indexation
Gold, unlisted shares, other assets24 months12.5% without indexation
Land/building bought before 23 Jul 202424 monthsLower of 12.5% (no indexation) or 20% (with indexation) - resident individuals/HUFs
Land/building bought on/after 23 Jul 202424 months12.5% without indexation


 

How to calculate LTCG tax?

Here’s how to calculate long term capital gains tax:

  • The calculation of LTCG tax depends on the type of asset and the applicable tax rate.
  • For equity-oriented assets like unit of equity-oriented mutual funds and shares of listed companies, the long-term capital gains tax rate is 12.5% on gains exceeding Rs. 1,25,000. Gains up to Rs. 1,25,000 are exempt from tax.
  • For non-equity assets like debt mutual funds, real estate properties, and gold, the LTCG tax is 12.5% without indexation. Indexation was used to help adjust the purchase price of the asset for inflation, reducing the taxable gains.

How to calculate capital gains for NRIs

Calculating capital gains for NRIs

Non-Resident Indians (NRIs) are permitted to invest in Indian capital markets as long as they possess a PAN card and complete their eKYC verification. The tax liability for NRIs in India depends on their residential status for the financial year, as outlined by income tax regulations. If classified as a 'resident,' an individual's global income is taxable in India. However, if classified as an 'NRI,' only the income earned or accrued within India is taxable. Try our free income tax calculator.

Types of Taxable Income for NRIs in India:

  • Salary earned in India or from services rendered within India
  • Income from house property located in India
  • Capital gains from the transfer of assets situated in India
  • Interest from fixed deposits or savings accounts in India

Recent Changes in Tax Rates for NRIs on Capital Gains

In the Union Budget 2024-25, the Indian government proposed revisions to the tax rates on certain capital gains for NRIs. These changes aim to align the tax treatment of NRIs with that of resident investors. The revised tax rates apply to transfers made on or after July 23, 2024.

Type of IncomeFor Transfers Before July 23, 2024 (TDS Rate)For Transfers On or After July 23, 2024 (TDS Rate)
Long-term capital gains under Section 115E10%12.5%
Long-term capital gains under Section 112(1)(c)(iii)20%12.5%
Long-term capital gains exceeding INR 1,00,000 under Section 112A10%12.5%
Other long-term capital gains not covered under Sections 10(33) and 10(36)20%12.5%
Short-term capital gains under Section 111A15%20%


These updates reflect the government's approach to standardize tax structures, ensuring consistency for NRIs and residents alike.


Factors influencing LTCG calculation

1. Type of asset:

  • Equity-oriented assets: Equity-oriented assets (listed shares, equity funds, ELSS) are taxed at 12.5% on LTCG above Rs. 1.25 lakh per financial year, without indexation.
  • Non-equity assets: These include debt mutual funds, real estate, and gold. LTCG on these assets is taxed at 12.5% without indexation, which was previously used to adjust the purchase price for inflation, reducing the taxable gain.

2. Holding period:

  • Equity-oriented assets: To qualify as long-term, these assets must be held for more than one year.
  • Non-equity assets: For these assets, the holding period is generally more than three years. The longer the holding period, the more significant the effect of indexation for non-equity assets.

3. Cost Inflation Index (CII):

  • CII for non-equity assets: The CII-based indexation benefit stands removed for most assets; it survives only as the optional 20%-with-indexation route for land and buildings bought before 23 July 2024.
  • Absence of indexation for equity-oriented assets: Equity assets do not benefit from indexation, which makes the actual taxable gains higher compared to non-equity assets.

4. Exemption limits:

  • Equity-oriented assets: There is an exemption limit of Rs. 1.25 lakh on LTCG. Gains up to Rs. 1.25 lakh in a financial year are not taxable, which is particularly beneficial for small investors.
  • Non-equity assets: There is no such exemption limit for non-equity assets. All gains are subject to tax after indexation.

5. Date of acquisition and sale:

  • Impact on calculation: The exact dates of acquisition and sale determine the applicable CII for non-equity assets and the holding period for all assets. These dates are crucial for establishing whether the asset qualifies for LTCG treatment and for calculating the indexed cost (for non-equity assets) or the tax-exempt threshold (for equity-oriented assets).
  • Grandfathering provisions: For equity-oriented assets purchased before 31st January 2018, the higher of the actual purchase price or the market price as on 31st January 2018 is considered for LTCG calculation, due to changes in tax laws.

By considering these factors, investors can effectively plan their investments and tax liabilities, optimising their returns and ensuring compliance with tax regulations.

Here is an example for better understanding:

Before the Budget 2024 revisions, investors could claim indexation benefits. For instance, if Mrs. Gupta had used indexation, her indexed cost of acquisition (Rs. 35,000 × 320/100) would have been Rs. 1,12,000. After subtracting this from the sale value, her taxable gain would have been Rs. 6,38,000, taxed at 20%, resulting in a tax liability of Rs. 1,27,600.

However, after Budget 2024, the rules have changed:

  • Long-term capital gains (LTCG) on most capital assets, including equity shares, are now taxed at a flat 12.5%, with no indexation benefit.
  • The original purchase cost (Rs. 35,000 in this case) must be used for tax calculations.
  • Listed equity shares (with STT) now enjoy an LTCG exemption limit of Rs. 1.25 lakh.

Applying the new rules to Mrs. Gupta’s case:

  • Sale price: Rs. 7,50,000
  • Cost of acquisition: Rs. 35,00
  • LTCG: Rs. 7,50,000 − Rs. 35,000 = Rs. 7,15,000
  • If the Rs. 1.25 lakh exemption is applicable, taxable gain = Rs. 7,15,000 − Rs. 1,25,000 = Rs. 5,90,000
  • Tax at 12.5% = Rs. 73,750

If the exemption does not apply, the tax payable would be 12.5% of Rs. 7,15,000 = Rs. 89,375.

Other topics you might find interesting
Short Term Capital Gains TaxNew Income Tax Slabs and RatesDirect Tax Code 2025Income Tax on 30 Lakhs Salary
Income Tax Returns for Mutual FundsInheritance TaxNet Investment Income TaxShort Term vs Long Term Capital Gains
Assessment Year and Financial YearIncome Tax Return Extended DateSection 80IA of Income Tax ActLong Term Capital Gain Tax on Property

What are the exemptions on long term capital gains tax?

It is important to learn about the exemptions on long term capital gains tax. Listed below are some details:

  • There are certain exemptions available to investors on long term capital gains under various sections of the Income Tax Act, 1961.
  • For example, Section 54 provides an exemption on LTCG tax if the gains from the sale of a residential house property are reinvested in another residential house property within the specified period.
  • Under Section 54EC, capital gains up to a maximum of Rs. 50 lakhs, made on the sale of a long term asset, can be exempted if the proceeds are invested in certain specified bonds within 6 months.

  • Capital gains arising from the sale of equity shares or units of equity-oriented mutual funds on or after April 1, 2018, up to Rs. 1.25 lakh in a fiscal year is exempt from tax. Gains exceeding Rs. 1.25 lakh are taxed at a rate of 12.5%.


It is important to note that these exemptions have certain conditions and criteria that must be met to claim them.

How to save tax on long term capital gains?

Four legitimate ways to reduce LTCG tax: 

  1. Harvest the exemption annually – redeem equity gains up to Rs. 1.25 lakh each financial year and reinvest; the exemption resets every year and unused limits do not carry forward. 
  2. Offset with losses – long-term capital losses can be set off against LTCG, and unadjusted losses carried forward for 8 years. 
  3. Reinvest property gains – Section 54 (house to house), Section 54F (any asset to house), or Section 54EC bonds (up to Rs. 50 lakh within 6 months). 
  4. Time your sales - if a redemption late in March would breach the Rs. 1.25 lakh limit, splitting it across two financial years uses two exemptions. Note: 80C investments like ELSS reduce your income tax, not your capital gains tax.

How to fill long-term capital gain in ITR-2?

To fill in Long-term Capital Gains (LTCG) in ITR-2, start by selecting the “Capital Gains” section in the income tax return form. Specify the type of asset sold, such as shares or property, and enter the sale consideration amount. Next, provide the cost of acquisition, including any expenses related to the sale. Calculate the LTCG by subtracting the indexed cost from the sale consideration. Report the net LTCG in the relevant section, ensuring it aligns with the total income. Finally, verify all details before submitting the form to ensure accuracy and compliance with tax regulations.

Conclusion

Long term capital gains tax (LTCG) is an essential aspect of taxation for investors. Understanding the holding period of assets, the applicable tax rates, and the exemptions available can help investors optimise their tax liabilities and make informed investment decisions. By exploring various tax-saving options and staying updated with the latest tax regulations, investors can make the most of their long term capital gains and work towards long term wealth creation and financial goals.

As with any tax-related matters, seeking professional advice is advisable to ensure accurate tax planning and compliance with tax laws. Overall, being aware of the tax implications of investment decisions is a key element in sound financial planning.

Essential tools for mutual fund investors

Mutual Fund CalculatorLumpsum CalculatorSIP Investment CalculatorStep Up SIP Calculator
SBI SIP CalculatorHDFC SIP CalculatorAxis Bank SIP CalculatorICICI SIP Calculator
Nippon India SIP CalculatorABSL SIP CalculatorGroww SIP CalculatorLIC SIP Calculator
Tata SIP CalculatorBOI SIP CalculatorMotilal Oswal Mutual Fund SIP CalculatorKotak Bank SIP Calculator

Top performing funds

Equity

Debt

Hybrid

Tax saver

View All
View all
cross

Search Mutual Funds & Add to Compare

search

Frequently Asked Questions

How much long term capital gain is tax-free?

Long term capital gains up to Rs. 1,00,000 are tax-free. This exemption applies to gains from the sale of listed equity shares or equity-oriented mutual funds.

How is Long term capital gain tax calculated?

LTCG tax is calculated at a flat rate of 20% on gains exceeding Rs. 1,00,000. Indexation benefits can also be applied to adjust the cost of acquisition for inflation.

How can I avoid LTCG tax?

While complete avoidance of LTCG tax is not possible, you can reinvest in specified bonds (Section 54EC) within six months of selling property to save on LTCG tax.

Is Long term capital gain tax automatically deducted?

No, LTCG tax is not automatically deducted. You need to calculate and pay it while filing your income tax return.

How can I reduce my Long term capital gain tax on sale of property?

Consider reinvesting in another residential property (under Section 54) or investing in specified bonds (under Section 54EC) to reduce LTCG tax liability.

What is the basic exemption for Long term capital gain tax?

The basic exemption limit for LTCG is Rs. 1,00,000. Gains below this threshold are tax-free.

Are senior citizens exempted from Long term capital gain tax?

Unfortunately, senior citizens are not specifically exempted from LTCG tax. The same rules apply to all taxpayers.

How is long-term capital gains tax calculated on mutual funds?

Long-term capital gains tax on mutual funds is calculated on the gains accumulated and according to the time for which the units were held.

Who is exempt from long-term capital gains tax?

Exemption from long-term capital gains under Section 54 allows taxpayers to invest in up to two house properties, as opposed to the previous provision of one, under the same conditions. However, the capital gain from the sale of the house property must not exceed Rs. 2 crores.

What is the lock-in period for long-term capital gains?

The lock-in period for long-term capital gains on equity-oriented mutual funds is one year from the date of purchase, while for debt-oriented funds, it's three years.

What is the formula for long-term capital gains?

The formula for long-term capital gains (LTCG) is: LTCG = Sale Price - Indexed Cost of Acquisition (for non-equity assets) or Sale Price - Purchase Price (for equity-oriented assets). Indexation adjusts the purchase price for inflation.

How much is long term capital gains against income?

Long-term capital gains are taxed at 10% for equity-oriented assets on gains exceeding Rs.1 lakh, and at 20% for non-equity assets after indexation. This tax is separate from the regular income tax.

What is the time period for long term capital gains?

The time period for long-term capital gains is more than one year for equity-oriented assets and more than three years for non-equity assets. Holding the asset beyond these periods qualifies it for LTCG taxation.

What is the LTCG tax rate for 2025?

The LTCG (Long-Term Capital Gains) tax rate for 2025 in India is 12.5% (without indexation) on gains exceeding ₹1.25 lakh for equity-oriented mutual funds and listed equity shares.

What is the LTCG tax rate for FY 2026-27?

For FY 2026-27, long-term capital gains on listed shares and equity mutual funds are taxed at 12.5% on gains above Rs. 1.25 lakh in the financial year. Most other assets - gold, unlisted shares, property - are also taxed at 12.5% without indexation, with an optional 20%-with-indexation route for land and buildings bought before 23 July 2024. Budget 2026 made no changes to these rates. Cess of 4% applies on the tax, plus surcharge where income thresholds are crossed.

 

Did Budget 2026 change LTCG tax?

No. Budget 2026 kept the LTCG framework unchanged - the 12.5% rate, the Rs. 1.25 lakh equity exemption, and the 12/24-month holding periods continue for FY 2026-27. The notable capital-market changes were the taxation of share-buyback proceeds as capital gains in shareholders' hands and a rise in STT on commodity futures to 0.05%. From 1 April 2026, the Income Tax Act, 2025 also came into force - the rates are the same, but section references and FY/AY terminology have changed.

 

How much long-term capital gain is tax-free in a year?

For equity shares and equity mutual funds, LTCG up to Rs. 1.25 lakh per financial year is exempt - tax applies only to the amount above it. The exemption applies per person, per financial year, across all your equity holdings combined, and unused exemption does not carry forward. Other asset classes have no equivalent threshold; their gains are taxable from the first rupee, subject to reinvestment exemptions under Sections 54, 54F and 54EC.

Show More Show Less

Related videos

Bajaj Finance app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finance App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finance App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-qualified limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finance App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

GET THE APP

Disclaimer

Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.

Disclaimer:

Bajaj Finance Limited ("BFL") is registered with the Association of Mutual Funds in India ("AMFI") as a distributor of third party Mutual Funds (shortly referred as 'Mutual Funds) with ARN No. 90319

BFL does NOT:

(i) provide investment advisory services in any manner or form:

(ii) carry customized/personalized suitability assessment:

(iii) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.

In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on As-is basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme/Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities forming part of the Mutual Fund. The NAV will inter-alia be exposed to Price/Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other/better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.

Investment by a person residing outside the territorial jurisdiction of India is not acceptable nor permitted.

Disclaimer on Risk-O-Meter:

Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc, and shall also consult their Professional advisors, if they are unsure about the suitability of the scheme before investing.


Disclosure: Bajaj Finance Limited (BFL) is a distributor of Mutual Funds with ARN - 90319 and distributes mutual funds of Bajaj Finserv Asset Management Limited (BFSAMC). BFL receives commission towards distribution of mutual fund products. BFSAMC is a group company of BFL, carrying business on arm’s length basis without any conflict of interest and in accordance with the prevailing law / regulation.