LTCG Equity Calculator — Long-Term Capital Gains Tax on Shares & MF

LTCG Equity Calculator — Long-Term Capital Gains Tax on Shares and Mutual Funds

What is equity LTCG?

Long-term capital gains (LTCG) on equity arise when you sell listed equity shares, equity-oriented mutual funds, or REITs after holding them for more than 12 months. The gain is taxed at a flat rate under § 112A of the Income Tax Act — separately from your salary or business income.

Budget 2024 rate change (effective 23-Jul-2024)

Sale date	LTCG rate	₹1L exemption
Before 23-Jul-2024	10%	Yes
On/after 23-Jul-2024	12.5%	Yes

The ₹1,00,000 annual exemption remains in both eras. Gains up to ₹1L per FY are tax-free.

How LTCG is calculated

Capital gain = Sale price − Cost of acquisition − Transfer expenses
Taxable gain = max(0, Capital gain − ₹1,00,000 exemption)
LTCG tax     = Taxable gain × applicable rate (10% or 12.5%)

For holdings purchased before 1-Feb-2018, the cost is grandfathered (see FAQ).

Grandfathering rule (§ 55(2)(ac))

For shares and MF units bought before 1 February 2018, the IT Act protects gains accrued up to 31 January 2018:

Grandfathered cost = max(actual purchase price, min(FMV on 31-Jan-2018, sale price))

Example: You bought ₹1,00,000 worth of shares in 2016. FMV on 31-Jan-2018 = ₹2,00,000. You sell in 2025 for ₹4,00,000. Grandfathered cost = max(1L, min(2L, 4L)) = ₹2,00,000. Gain = ₹2,00,000.

Worked example — post-Budget 2024 LTCG

Priya bought 500 units of an equity MF on 1 April 2023 at ₹1,000/unit (total cost ₹5,00,000). She redeems on 15 January 2025 at ₹1,300/unit (proceeds ₹6,50,000).

Holding: 21 months → LTCG (> 12 months)
Sale date: 15-Jan-2025 → post-Budget 2024 → 12.5%
Capital gain: ₹6,50,000 − ₹5,00,000 = ₹1,50,000
Less ₹1L exemption: ₹1,50,000 − ₹1,00,000 = ₹50,000 taxable
Tax: ₹50,000 × 12.5% = ₹6,250

Worked example — pre-Feb-2018 grandfathered holding

Rahul bought shares in a blue-chip company on 15 January 2017 at ₹1,50,000 total. FMV on 31-Jan-2018 = ₹3,00,000. He sells on 1 March 2025 for ₹5,00,000.

Grandfathered cost: max(1.5L, min(3L, 5L)) = ₹3,00,000
Capital gain: ₹5,00,000 − ₹3,00,000 = ₹2,00,000
Less ₹1L exemption: ₹2,00,000 − ₹1,00,000 = ₹1,00,000 taxable
Rate: 12.5% (post-Budget 2024)
Tax: ₹1,00,000 × 12.5% = ₹12,500

Without grandfathering, gains on the ₹1.5L rise from 2017 to 31-Jan-2018 would have been taxed too.

Bridges

STCG Equity Calculator — for holdings under 12 months (15%/20% rate, no ₹1L exemption)
Income Tax Calculator — LTCG is separate from slab income; calculate both
Advance Tax Calculator — LTCG > ₹1L triggers advance tax instalment obligations

Frequently Asked Questions

What is the ₹1 lakh LTCG exemption?

Under § 112A, the first **₹1,00,000** of LTCG on listed equity shares and equity-oriented mutual funds is exempt from tax each financial year. Only the gain above ₹1 lakh is taxed. This exemption is per taxpayer per FY — not per transaction. If you make multiple LTCG transactions in a year, aggregate them first, then apply the ₹1L deduction.

Did the Budget 2024 change the LTCG rate?

**Yes.** The Finance (No.2) Act 2024 increased the equity LTCG rate from **10% to 12.5%** for sales made **on or after 23 July 2024**. The ₹1L annual exemption was retained. Sales before that date remain taxable at 10%. The indexation benefit was also removed for equity (but equity never had indexation — that change primarily affects debt/property).

What is the grandfathering rule for shares bought before 1-Feb-2018?

For shares or equity MF units purchased **before 1 February 2018**, the cost of acquisition is the **higher of**: (a) actual purchase price, or (b) the lower of FMV on 31-Jan-2018 and the actual sale price. This is the § 55(2)(ac) / § 112A grandfathering rule introduced when LTCG on equity was reintroduced in Budget 2018. In effect, any gains that accrued up to 31 January 2018 are protected from LTCG tax — only gains after that date are taxable.

What is the holding period for equity LTCG? Is it exactly 12 months?

For listed equity shares, REITs, and equity-oriented mutual funds, the holding must be **more than 12 months** to qualify as long-term. This means exactly 12 calendar months (e.g., buying on 1 April 2024 and selling on 1 April 2025) is **NOT long-term** — it is exactly 12 months, which is still STCG. You need to hold for at least one day beyond the same-date next year (i.e., 2 April 2025 sale for a 1 April 2024 purchase). The calculator classifies strictly: holdingMonths > 12 = LTCG.

What expenses can I deduct from the sale proceeds?

The IT Act allows deduction of **cost of improvement** and expenses incurred wholly and exclusively in connection with the **transfer** (e.g., brokerage, STT if not already claimed elsewhere, stamp duty, legal fees for the transfer). STT paid on equity delivery transactions is not separately deductible as a cost since the tax rate already factors it in, but transaction-specific brokerage is deductible. For equity MF units, exit loads and redemption charges are deductible from sale proceeds.

Are mutual fund redemptions treated the same as equity share sales for LTCG?

**Yes, for equity-oriented MFs.** An equity-oriented mutual fund is one that invests at least 65% of its assets in Indian equity. Redemptions from such funds are taxed exactly like equity shares: LTCG at 10%/12.5% (Budget 2024 cutoff: 23-Jul-2024) if held > 12 months. The tax point is the **redemption date** (when the units are redeemed), not the NAV date or settlement date. SIP units follow FIFO: each SIP instalment has its own purchase date.

Is LTCG taxed at the slab rate or a flat rate? What about the new tax regime?

Equity LTCG is taxed at a **flat rate** (10%/12.5%) regardless of your income slab or regime. It is computed **separately** from your regular slab income. Both the old and new tax regimes apply the same § 112A rate to equity LTCG — the regime choice does not affect LTCG. However, the basic exemption limit (₹3L old regime / ₹3L new regime) can offset LTCG if your regular income is below the exemption.

Compliance disclaimer

The tax calculations on this page are based on the Income Tax Act, 1961 provisions applicable for the financial year shown. Tax laws change; always verify current provisions and consult a Chartered Accountant for filing decisions. This is educational content, not tax advice.