LTCG Tax Rules 2026: Latest Long-Term Capital Gains Tax Rates on Shares, Mutual Funds and Property
Long-Term Capital Gains (LTCG) tax continues to be an important consideration for Indian investors in FY 2026–27. Whether you invest in stocks, equity mutual funds, gold or real estate, understanding the applicable tax rate can help you estimate your actual profit after selling an asset.
The government revised India’s capital gains taxation framework through the Finance (No. 2) Act, 2024. Under the revised provisions, many long-term capital gains are taxed at 12.5% without indexation, while specified equity investments have a separate exemption threshold of ₹1.25 lakh per financial year.
However, LTCG rules are not identical for every investment. Listed shares, equity-oriented mutual funds, property and other assets can have different holding-period requirements, exemptions and special provisions.
Here is a detailed guide to LTCG tax in India for FY 2026–27, including applicable rates, calculation examples, property rules, exemptions and important points investors should know before selling their investments.
What Is LTCG Tax?
Long-Term Capital Gains tax is the tax payable on profits earned when a qualifying capital asset is sold after being held for the period required to qualify as a long-term asset.
For example, suppose an investor purchases shares for ₹1 lakh and later sells them for ₹1.80 lakh. The profit is ₹80,000 before considering eligible transaction expenses and applicable tax rules.
Whether the gain qualifies as long-term depends on the type of asset and the holding period.
LTCG can arise from several investments, including:
- Listed equity shares
- Equity-oriented mutual funds
- Land and residential property
- Gold and other qualifying capital assets
- Certain securities and unlisted shares
The applicable tax rate depends on the asset, the date of transfer and the relevant provision of the Income-tax Act.
LTCG Tax Rates in India for FY 2026–27
The following table summarises the principal rates applicable under the framework introduced in July 2024.
| Investment category | General LTCG tax treatment |
|---|---|
| Listed equity shares meeting Section 112A conditions | 12.5% on eligible gains exceeding ₹1.25 lakh |
| Equity-oriented mutual funds meeting Section 112A conditions | 12.5% on eligible gains exceeding ₹1.25 lakh |
| Units of qualifying business trusts | 12.5% on eligible gains exceeding ₹1.25 lakh |
| Most other long-term capital assets | Generally 12.5% without indexation |
| Certain property acquired before July 23, 2024 | Eligible resident individuals and HUFs may compare the 12.5% without-indexation calculation with the 20% indexed calculation, subject to conditions |
These rates are generally quoted before applicable surcharge and cess. Special provisions may apply depending on the taxpayer and asset.
LTCG Tax on Shares and Equity Mutual Funds
Investors selling qualifying listed equity shares, equity-oriented mutual fund units and certain business trust units generally fall under Section 112A.
For transfers made on or after July 23, 2024, eligible long-term gains are taxed at 12.5% on the aggregate amount exceeding ₹1.25 lakh in a financial year.
The exemption is an annual threshold for qualifying gains, not a separate ₹1.25 lakh exemption for every stock or mutual fund.
To qualify for the special treatment, Securities Transaction Tax (STT) must generally be paid on the transfer. For equity shares, STT must also generally have been paid on acquisition, subject to specified exceptions.
Example: How Much LTCG Tax Could You Pay?
Suppose an investor earns ₹2 lakh in qualifying long-term gains from listed equity shares and equity-oriented mutual funds during FY 2026–27.
| Particulars | Amount |
|---|---|
| Total eligible LTCG | ₹2,00,000 |
| Annual threshold | ₹1,25,000 |
| Taxable gain above threshold | ₹75,000 |
| Tax at 12.5% | ₹9,375 |
| Health and education cess at 4% | ₹375 |
| Illustrative total tax | ₹9,750 |
This example assumes no surcharge, no other adjustments and full eligibility for the Section 112A treatment. The actual liability may differ based on the investor’s circumstances.
If qualifying gains do not exceed ₹1.25 lakh, no tax is generally payable on those gains under Section 112A, although reporting requirements and other tax rules still need to be considered.
LTCG Tax on Property in India
Property taxation requires particular attention because the applicable rules can depend on when the property was acquired and sold.
Under the general framework applicable to transfers on or after July 23, 2024, long-term capital gains on property are generally taxed at 12.5% without indexation.
However, a special protection applies to eligible resident individuals and Hindu Undivided Families (HUFs) selling land or buildings acquired before July 23, 2024. They can compare the tax calculated under the new 12.5% method without indexation with the tax under the earlier 20% method with indexation. If the new method results in higher tax, the protection limits the tax liability to the amount calculated under the earlier method, subject to the statutory conditions.
Indexation adjusts the acquisition cost to reflect inflation, which can reduce the taxable gain under the earlier calculation method.
For example, a property bought many years ago may have experienced a substantial increase in its nominal value. Applying indexation can produce a different taxable gain from simply subtracting the original purchase price from the selling price.
Property sellers should calculate both methods where the special protection applies and retain purchase documents, improvement costs and sale records.
What Is the LTCG Holding Period?
An asset must be held for a qualifying period before the profit can be treated as long-term.
For many listed securities, including listed equity shares, the general long-term holding period is more than 12 months. For many other assets, including property and unlisted shares, the general period is more than 24 months.
However, different rules and exceptions can apply to particular securities, assets and transactions. Investors should confirm the holding-period requirement for their specific investment before calculating tax.
The acquisition date, transfer date and applicable transitional provisions can all affect the final tax treatment.
How to Calculate Long-Term Capital Gains
The basic calculation starts with the sale consideration and deducts the acquisition cost and eligible expenses associated with the transfer. Eligible improvement costs and other statutory adjustments may also be relevant.
A simplified formula is:
Capital gain = Sale price − acquisition cost − eligible transfer expenses − other permitted adjustments
For example, if an investor purchases an eligible asset for ₹5 lakh and sells it for ₹8 lakh, the initial gain is ₹3 lakh before considering eligible expenses and any asset-specific adjustments.
The taxable amount is then determined under the applicable capital gains provisions.
For qualifying equity investments, the ₹1.25 lakh annual threshold may reduce the amount subject to tax. For property and other assets, separate calculations and exemptions may apply.
Investors should not assume that the same formula or deduction rules apply identically to every asset category.
Can Investors Save LTCG Tax Legally?
Indian tax law provides certain exemptions and reinvestment provisions for eligible capital gains. Their availability depends on the type of asset sold, the taxpayer’s status and the conditions specified in the relevant section.
For example, Section 54 may provide relief for eligible gains from a residential house when qualifying residential property is purchased or constructed within the prescribed time limits.
Section 54F can provide relief in certain cases involving the transfer of long-term assets other than a residential house, subject to conditions concerning investment in residential property and other eligibility requirements.
Section 54EC may allow eligible capital gains from specified long-term assets to receive relief when invested in qualifying bonds within the prescribed period and subject to the applicable limits.
These provisions have detailed eligibility requirements, investment deadlines and restrictions. Investors should confirm the conditions before making a reinvestment decision solely for tax purposes.
Important LTCG Tax Rules Investors Should Remember
Before selling an investment, consider the following points:
- Check the holding period: Confirm whether the asset qualifies as long-term.
- Identify the correct tax rate: Equity investments and property may follow different provisions.
- Maintain transaction records: Purchase statements, sale contracts and eligible expense receipts help support calculations.
- Check exemptions carefully: Reinvestment relief is available only when statutory conditions are satisfied.
- Review the annual threshold: The ₹1.25 lakh Section 112A threshold applies to eligible aggregate gains, not each individual transaction.
- Consider additional charges: Surcharge and cess may increase the final tax payable.
- Report gains correctly: Use the appropriate income-tax return form and capital gains schedules.
The official Income Tax Department website provides information on capital gains taxation and the relevant return-filing requirements.
Frequently Asked Questions (FAQs)
1. What is the LTCG tax rate in India for FY 2026–27?
Many long-term capital gains are taxed at 12.5% without indexation. Qualifying equity investments generally receive the ₹1.25 lakh annual threshold under Section 112A.
2. Is LTCG up to ₹1.25 lakh tax-free?
For eligible gains covered by Section 112A, the aggregate long-term capital gain up to ₹1.25 lakh in a financial year is generally not taxed under that section. This threshold does not automatically apply to every asset.
3. What is the LTCG tax on shares?
For qualifying listed equity shares transferred on or after July 23, 2024, the rate is generally 12.5% on eligible gains exceeding ₹1.25 lakh, subject to the statutory conditions.
4. Is indexation available for property?
The general rule for property transferred on or after July 23, 2024, is 12.5% tax without indexation. Eligible resident individuals and HUFs selling land or buildings acquired before that date may receive the specified protection allowing comparison with the earlier indexed calculation.
5. How long must shares be held for LTCG?
Listed equity shares generally need to be held for more than 12 months to qualify as long-term assets. Other investments may have different holding periods.
6. Can LTCG tax be reduced legally?
Eligible taxpayers may qualify for statutory exemptions or reinvestment relief under provisions such as Sections 54, 54F and 54EC, subject to the relevant conditions.
Final Verdict
LTCG tax rules are essential for Indian investors planning to sell shares, mutual funds, property or other capital assets during FY 2026–27. The 12.5% rate and ₹1.25 lakh annual threshold for qualifying equity investments are particularly important, while property sellers should check whether the special indexed-cost protection applies to their circumstances.
The most effective approach is to calculate the gain correctly, verify the holding period, review eligible exemptions and maintain complete transaction records before filing an income-tax return.
Tax treatment can vary significantly between investments, so investors should consult the current Income Tax Department guidance or a qualified tax professional for decisions involving substantial gains.