LTCG (Long-Term Capital Gains)
Definition
Tax on profits from selling equity held > 1 year or other assets, subject to a ₹1.25 Lakh tax-free limit for stocks.
Key Takeaways
- LTCG arises from selling assets held longer than 12 months (equity) or 24 months (other assets).
- Equity LTCG taxed at 12.5% with ₹1.25 Lakh annual exemption under Section 112A.
- Real estate and gold LTCG taxed at flat 12.5% without exemption or indexation.
- Available under both Old and New Tax Regimes.
Detailed Explanation
Long-Term Capital Gains (LTCG) is the profit realized from selling capital assets held for more than a specified period. For listed equity shares and equity-oriented mutual funds, the holding period is more than 12 months. For other assets like real estate and gold, the holding period is more than 24 months.
Under Section 112A, LTCG from listed equity shares and equity mutual funds is taxed at 12.5% with an annual tax-free exemption of ₹1.25 Lakhs. This means only gains exceeding ₹1.25 Lakhs are taxed. For other assets like property and gold, LTCG is taxed at a flat 12.5% without indexation benefit and without the ₹1.25 Lakh exemption. LTCG tax applies to both Old and New Tax Regimes.