LTCG Tax in India: A Comprehensive Guide

Understanding LTCG Tax

Long-Term Capital Gains (LTCG) tax refers to the tax levied on profits or gains earned from the sale of capital assets. In India, LTCG tax applies to gains that exceed Rs 1 lakh in a financial year. However, gains up to Rs 1 lakh are exempt from taxation.

LTCG Rate

The LTCG tax rate varies depending on the asset type and the holding period. For example, in India, the LTCG tax on equities, mutual funds, and stocks is 10% if the profits exceed Rs 1 lakh in a financial year.

Calculating LTCG Tax

To calculate LTCG tax, you need to subtract the purchase price of the asset from its sale price. The resulting gain is subject to the applicable tax rate. For instance, if you sell ELSS shares worth Rs 50,000 and realize a profit of Rs 5,000, you will incur an LTCG tax of Rs 500 (10% of Rs 5,000).

Important Points

• LTCG tax rates vary based on the type of asset.
• LTCG tax is charged in the year of the asset transfer.
• ELSS investments can generate LTCG, which is subject to the applicable tax rate.