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With the newly announced LTCG tax (Long Term Capital Gain tax), there are many doubts and myths floating around.

Here are 10 facts about LTCG that you must know about.

10 Facts About LTCG

  1. LTCG tax – 10% is charged on equity shares listed on a recognized stock exchange and equity mutual funds which are held for more than a year.
  2. The tax is applicable only on the gains and not on the entire investment amount.
  3. Tax is charged as per LTCG in the year in which the equity shares and equity oriented mutual funds are sold.
  4. Indexation benefit has not been provided to the investors.
  5. The capital gains of an investor till 31st January, 2018 will be grandfathered i.e no Long Term Capital Gain tax will be charged on capital gains till 31st January, 2018.
  6. There is still no tax on long-term gains for an amount up to Rs 1 lakh.
  7. LTCG tax will be applicable on gains from ELSS funds also.
  8. Though market might have responded negatively and reacted with a fall in NIFT and Sensex in the past 2 days but in the long run Government’s push to rural and small industries might bring significant growth in the economy.
  9. In 2004, the government had abolished LTCG on equities over a year. Since then there was no tax on LTCG of equities, only Securities Transaction Tax (STT) of 0.001% on sale of mutual funds and STT of 0.1% both at the time of buying and selling of equities was charged.
  10. Even after the introduction of this tax, many Mutual Fund CEOs have said LTCG tax is not so bad after all.

Happy investing!

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