Do these 3 things before closing this tab:
1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsNo official materials reviewed announce abolition of long-term capital gains (LTCG) tax on ordinary listed-stock gains in India. For qualifying listed-equity gains under section 112A, the Income Tax Department’s current guidance describes a 12.5% rate on aggregate annual gains above ₹1.25 lakh for transfers on or after July 23, 2024. The treatment depends on the asset, securities transaction tax (STT) conditions and the taxpayer’s circumstances. The Income-tax Act, 2025 took effect in April 2026, so check the corresponding rules for tax year 2026–27 before relying on the earlier Act’s provisions for later transfers.
What is long-term capital gain?
A capital gain is the profit made when a capital asset is transferred. A gain is classified as long-term when the asset meets the holding-period rule that applies to that type of asset. The applicable period and tax treatment vary by asset; a rule for listed shares should not be assumed to apply to property, mutual funds generally, or every investment.
As an Amazon Associate I earn from qualifying purchases.
Capital gains are generally taxed in the year the asset is transferred, according to the Income Tax Department’s capital-gains guidance. The amount taxed is a gain, not the full sale proceeds. The tax treatment can also depend on acquisition and transfer dates, eligible costs, exemptions and the taxpayer’s circumstances.
How does LTCG tax work on listed shares?
Section 112A covers specified long-term gains from equity shares, units of equity-oriented mutual funds and units of business trusts, subject to conditions. For equity shares, STT generally must have been paid both on acquisition and transfer, although acquisition-related exceptions exist. The Income Tax Department outlines the asset and STT conditions in its guidance on tax on sale of shares and its section 112A page.
#1 Best Overall
- Comes with secure packaging
- Easy to read text
- It can be a gift option
For qualifying transfers on or after July 23, 2024, the department describes a 12.5% special rate on aggregate section 112A gains above ₹1.25 lakh in the relevant year. The ₹1.25 lakh threshold applies across covered gains; it is not a separate tax-free allowance for each share or company. The department describes the earlier treatment for transfers before July 23, 2024 as a 10% rate on qualifying gains above ₹1 lakh. The transfer date matters when applying the rules to transactions from different periods.
| Transfer date | Section 112A threshold described by the department | Rate on qualifying gains above threshold |
|---|---|---|
| Before July 23, 2024 | ₹1 lakh aggregate | 10% |
| On or after July 23, 2024 | ₹1.25 lakh aggregate | 12.5% |
These figures describe the specified section 112A treatment, not a universal LTCG rate. Other assets and situations may have different holding periods, rates, indexation treatment, exemptions and surcharge rules.
Rank #2
- Ideal for Gifting
- Ideal for a bookworm
- Comes with Proper Binding
How much LTCG tax could a stock investor owe?
Suppose an investor has ₹2,00,000 in aggregate qualifying section 112A long-term gains from eligible transfers on or after July 23, 2024. Subtracting the ₹1,25,000 threshold leaves ₹75,000 subject to the stated 12.5% special rate before taxpayer-specific adjustments. This arithmetic is not a complete tax bill: surcharge, where applicable, and health and education cess can affect the final amount. The Income Tax Department states that cess is 4% of income tax plus applicable surcharge in its tax rates and computation guidance.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
The section’s application may also be affected by a resident individual’s or Hindu Undivided Family’s unused basic exemption in circumstances described in the provision. Do not assume the section 87A rebate will offset section 112A tax; check the current provisions for the taxpayer and tax year. STT, brokerage, dividends and other tax consequences are separate from the LTCG rate.
Is LTCG tax being removed?
The official summary of the Union Budget 2026–27 reviewed does not announce abolition of LTCG tax on ordinary listed-equity gains. It reports that the Income-tax Act, 2025 took effect in April 2026 and lists other direct-tax measures. Because the section 112A pages consulted still set out the framework under the earlier Act, verify the corresponding provision and rules under the new Act for transfers after commencement. The summary is not proof that no public figure has ever proposed a change; it supports the narrower conclusion that abolition is not announced in those budget materials.
A separate Finance Ministry announcement in June 2026 describes an exemption, applicable to income from April 1, 2026, for foreign portfolio investors’ interest and capital gains from Government Securities. That measure is limited to the specified investor group and asset; it is not a general exemption for domestic stock investments.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why do some investors argue for abolition?
The case for removing LTCG tax is usually framed around investors’ after-tax returns, the incentive to hold or sell assets, and the simplicity of the tax system. A tax on gains can reduce the amount an investor retains when selling a profitable investment. Whether abolition would materially change investment decisions, improve market participation or produce other economic effects cannot be established from the official materials cited here.
Recommended Free Tools
The policy trade-off includes public revenue and how tax benefits are distributed among investors and income groups. Abolition would remove this tax from qualifying gains, but the value of that relief would vary with investors’ gains and tax circumstances. The available official sources do not quantify the revenue cost, distributional effects or market response to abolishing LTCG tax.
Best Value
What was the purpose of the 2024 change?
The government described the July 2024 changes as simplification and rationalisation. Its announcement said the changes would align rates across asset classes, raise the section 112A threshold from ₹1 lakh to ₹1.25 lakh and remove indexation while lowering the general LTCG rate to 12.5%. These are the government’s stated policy aims, not independent evidence that the changes improved fairness or investment outcomes. The announcement is available from the Ministry of Finance via PIB; the 2024 Finance Bill memorandum explains the provisions.
Quick Recap
What should stock investors check before filing?
- Identify the transfer date: the threshold and rate described for section 112A differ for transfers before and from July 23, 2024.
- Confirm that the asset and transaction meet section 112A’s requirements, including the applicable STT conditions and any exception.
- Calculate qualifying gains in aggregate for the year rather than treating ₹1.25 lakh as an allowance for each stock.
- Check taxpayer-specific rules, including any unused basic exemption that may be available and the interaction with rebates.
- For transfers after the Income-tax Act, 2025 commenced in April 2026, verify the corresponding 2026–27 provision and rules rather than assuming the earlier Act’s section numbering and guidance settle the question.
- Calculate the final liability separately from the special rate, accounting for applicable surcharge and cess; keep STT, brokerage and dividends distinct.
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
