LONG TERM CAPITAL GAIN ON SALE of equity mutual funds and shares

1. Holding Period & Definition

Listed equity shares are treated as long‑term if held for more than 12 months before sale.
The asset must have been sold on a recognized stock exchange with STT paid at the time of sale.

2. Tax Rates & Exemption

a) Sale on or after July 23, 2024

LTCG exemption limit increased to ₹1.25 lakh per financial year.
Taxable gains above ₹1.25 lakh are charged at 12.5% (plus applicable cess and surcharge), without indexation benefit.

b) Sale on or before July 22, 2024

Older rules apply:
- LTCG exemption limit was ₹1.00 lakh.
- Gains over ₹1 lakh were taxed at 10% (no indexation for listed shares).
  👉 Note: Even if the sale occurred before July 23, 2024, the exemption limit for FY 2024‑25 remains ₹1.25 lakh in total for the financial year—but the applicable tax rate depends on the sale date as above.

3. Annual Summary Table

Sale Date	LTCG Exemption Limit	Tax Rate (on gains above exemption)	Indexation Benefit
On or after July 23, 2024	₹1.25 lakh	12.5%	No
On or before July 22, 2024	₹1.00 lakh	10%	No (for listed)

4. Reporting & Set‑Off Provisions

Losses from long‑term capital gains can be set off only against LTCG, and carried forward for 8 assessment years.
No Chapter VI‑A deductions (e.g., 80C) are allowed against LTCG under Section 112A.

5. ITR Filing & Rebate Considerations

If your total income (including LTCG/STCG) is ≤ ₹7 lakh and you’re under the new tax regime, rebate under Section 87A may still be applicable for FY 2024‑25, even for special incomes like LTCG/STCG.
Small investors (LTCG up to ₹1.25 lakh) may now use ITR‑1 (Sahaj) to report these gains (simplified filing).

6. Example

Imagine:

✅ TL;DR — LTCG on Listed Equity Shares for FY 2024‑25:

Holding > 12 months → Long-term.
Exemption: ₹1.25 lakh total for the year.
Sale date on/after July 23, 2024 → 12.5% tax on gains exceeding the exemption.
Sale date before July 23, 2024 → 10% tax on gains above ₹1 lakh (exemption recalculated proportionally).
No indexation; requires STT payment.
LTCG losses can only offset LTCG; carry-forward allowed

Timeline of events