LTCG stands for Long-Term Capital Gains, and it refers to the capital gains earned on the sale of assets that have been held for more than a specified period, which is currently one year for most assets, including equity shares, equity-oriented mutual funds, and real estate.
LTCG on equity shares and equity-oriented mutual funds are taxed at a rate of 10% on gains exceeding Rs. 1 lakh. However, gains made up to January 31, 2018, are grandfathered, which means that the gains made until that date are exempt from taxation.
For real estate assets, the holding period for qualifying as LTCG is two years, and the gains are taxed at the applicable slab rates.
It's worth noting that short-term capital gains, which are gains made on assets held for less than a year, are taxed at a higher rate than LTCG. For example, in the case of equity shares and equity-oriented mutual funds, the short-term capital gains are taxed at 15%.
LTCG tax rates are generally lower than short-term capital gains tax rates. The time an asset is held before it's sold determines whether the gain is considered long-term or short-term.
Certain assets, such as real estate and collectibles, may be subject to different LTCG tax rates and rules. Tax laws and rates regarding LTCG are subject to change, so staying informed and consulting with a tax professional is essential.
Proper tax planning and strategy can help minimize the tax paid on LTCG. Here are some essential things to consider about LTCG in India:
Long-Term Capital Gains (LTCG) are profits realized from the sale of an asset held for more than a year. LTCG can be taxed at a lower rate than short-term capital gains, making it an attractive option for long-term investors.
Understanding LTCG and the tax implications of investment strategies can help investors make informed decisions and maximize their returns.