Key Takeaway
In India, equity LTCG above ₹1.25 lakh is taxed at 12.5% (held >12 months), while STCG is taxed at 20% (held <12 months). Debt fund gains are taxed at your income slab rate regardless of holding period.
Transaction Details
Tax Liability Breakdown
2,50,000
LTCG (Long-Term)
Based on 18 months holdBudget 2024 Rule Updates
LTCG rate is 12.5% with a ₹1.25 Lakh annual tax exemption. STCG on equity is 20%. Ensure trades fit these time limits.
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Frequently Asked Questions
What is the difference between STCG and LTCG?
Short-Term Capital Gains (STCG) apply to equity sold within 12 months (taxed at 20%). Long-Term Capital Gains (LTCG) apply to equity held over 12 months (taxed at 12.5% above ₹1.25 Lakh annual exemption). For debt funds, all gains are taxed at slab rate regardless of holding period.
Is there a tax-free limit on LTCG from stocks?
Yes. LTCG up to ₹1.25 Lakh per financial year from equity/equity mutual funds is completely tax-free. Only gains exceeding this threshold are taxed at 12.5%.
How can I reduce capital gains tax legally?
Use tax-loss harvesting (sell losing positions to offset gains), utilize the ₹1.25 Lakh LTCG exemption annually, invest via ELSS for 80C benefit, and consider holding periods carefully.
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