No—you do not receive a fresh ₹1,25,000 limit for every sale. For qualifying long-term capital gains covered by Section 112A of India’s Income-tax Act, the limit is an annual aggregate threshold. Add the eligible gains from all qualifying transfers made during the same financial year, then apply the ₹1,25,000 threshold once.
For example, ₹80,000 of eligible gain from one sale plus ₹70,000 from another equals ₹1,50,000 for the year. The threshold is used once, leaving ₹25,000 above it before the applicable rate and the rest of your tax computation are considered.
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What the ₹1,25,000 limit actually covers
People often call the Section 112A threshold an “LTCG exemption.” That shorthand can mislead. It is not a universal exemption for every long-term capital gain or every investment. Section 112A applies to qualifying long-term gains from specified equity shares, units of equity-oriented mutual funds and units of business trusts, subject to statutory conditions including applicable Securities Transaction Tax requirements.
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The Income Tax Department’s current guidance identifies an annual aggregate threshold of ₹1,25,000 for financial year (FY) 2025-26. FY 2025-26 runs from 1 April 2025 through 31 March 2026. The Government of India’s budget FAQ says the increased limit applies from FY 2024-25 onward; the earlier threshold was ₹1,00,000.
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Therefore, before applying the limit, check two separate questions:
- Does each investment and transfer meet the Section 112A category and statutory conditions?
- What is the total qualifying long-term gain from all those transfers in the relevant financial year?
A gain from property, debt securities or another asset outside the specified Section 112A categories does not become eligible merely because you sold it after holding it for a long period.
How multiple transactions are combined
One financial year, one aggregate calculation
For a single financial year, list every transfer that qualifies under Section 112A and add the qualifying long-term gains. The ₹1,25,000 amount is then considered against that annual aggregate, not against each contract note, order or demat-account debit.
Splitting a holding into several orders, selling on different dates or using different brokers does not reset the threshold. The relevant unit is the financial year’s aggregate qualifying gain.
Sales in different financial years
The threshold is annual. Transactions falling in different financial years belong to the calculation for their respective years. Keep the year boundaries clear: a sale on 31 March belongs to the financial year ending that day, while a sale on 1 April starts the next financial year’s calculation.
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This does not mean that every year automatically produces a tax-free result. Eligibility, the amount of qualifying gain, the transfer date and your wider tax position still matter for each year.
Gains that are not Section 112A gains
Do not combine every long-term gain in your portfolio into one assumed Section 112A pool. The threshold is tied to the specified securities and statutory conditions. Classifying an asset incorrectly can produce the wrong return even if the arithmetic is accurate.
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Assume both transactions satisfy Section 112A conditions and occur in FY 2025-26:
| Transaction | Qualifying long-term gain |
|---|---|
| Sale 1 | ₹80,000 |
| Sale 2 | ₹70,000 |
| Annual aggregate | ₹1,50,000 |
| Section 112A threshold used once | ₹1,25,000 |
| Amount above threshold | ₹25,000 |
The first ₹80,000 sale does not consume a separate ₹1,25,000 allowance and the second sale does not receive another one. Together they are compared with one annual threshold. The ₹25,000 figure is an illustration of the amount above the threshold; it is not a complete personal tax calculation.
Which rate applies?
Official computation guidance distinguishes the rate by the date of transfer:
| Transfer date | Rate identified in current Section 112A guidance | How to use the distinction |
|---|---|---|
| Before 23 July 2024 | 10% | Use the rules applicable to a qualifying transfer made before this date. |
| On or after 23 July 2024 | 12.5% | Use the post-change rate for a qualifying Section 112A transfer. |
The transfer date, rather than the date you move money out of the brokerage account or file the return, controls this distinction. If transactions in a calculation span the 23 July 2024 change, preserve the dates and transaction-level figures so the applicable treatment can be determined correctly.
The wider 2024 capital-gains changes also addressed the treatment of long-term gains and indexation for relevant transfers on or after 23 July 2024. This article’s central point remains the Section 112A threshold: the annual ₹1,25,000 limit is not multiplied by the number of sales.
A practical method for calculating your annual position
- Set the financial-year window. Separate transactions between 1 April and 31 March. Do not mix two financial years because the sales happened in the same calendar year.
- Identify qualifying assets. Mark the equity shares, equity-oriented mutual-fund units and business-trust units that fall within Section 112A’s scope. Flag any holding whose category or statutory conditions are uncertain.
- Confirm long-term status. Use the holding-period and classification information applicable to the security and the relevant law. Do not assume that every sale shown on a broker statement is a Section 112A long-term gain.
- Record the transfer date. Keep the contract note, trade confirmation or other reliable transaction record. The 23 July 2024 date affects the rate distinction in the official guidance.
- Compute each qualifying gain. Use the figures required for that transaction and retain the supporting purchase and sale records. The threshold cannot be applied sensibly until the underlying gains are identified.
- Add the qualifying gains for the year. Combine the eligible Section 112A long-term gains, regardless of whether the orders were placed on different days or through different accounts.
- Apply ₹1,25,000 once. Compare the annual aggregate with the threshold. If the aggregate is higher, the portion above the threshold is the amount that remains for the relevant Section 112A tax treatment, subject to the rest of your return.
- Complete the broader tax computation. The threshold does not by itself determine your final liability. Other income, losses, applicable rates, filing details and personal circumstances can affect the result.
Common situations and what changes
Several sales of the same stock
Whether you sell one block or ten smaller blocks, qualifying long-term gains from those transfers in the same financial year enter the same annual aggregate. The number of sell orders does not create additional thresholds.
Equity shares and mutual funds sold together
If both categories independently satisfy Section 112A conditions, their qualifying gains are considered together for the annual aggregate. You do not receive one ₹1,25,000 amount for shares and another for equity-oriented mutual-fund units.
Sales through more than one broker
Broker separation is an administrative issue, not a tax reset. Gather statements from every broker and consolidate the qualifying transactions before applying the annual threshold.
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A sale close to 31 March
A transaction near the year-end can fall into a different financial year from a transaction only a few days later. Verify the actual transfer date shown in your records; do not allocate a sale based solely on when settlement cash became available.
Transactions around 23 July 2024
For a year that includes both pre-change and post-change transfers, retain each transfer date and amount. The official guidance distinguishes 10% for qualifying transfers before 23 July 2024 from 12.5% for qualifying transfers on or after that date. A single blended rate assumption can misstate the calculation.
Mistakes that lead to an incorrect “exemption” claim
- Applying ₹1,25,000 per transaction: This is the central error. The limit is annual and aggregate.
- Calling it a universal LTCG exemption: Section 112A is limited to specified securities and conditions.
- Using calendar years: Indian income-tax calculations use the financial-year framework, not January-to-December totals.
- Ignoring transfer dates: The official rate guidance separates transfers before 23 July 2024 from those on or after that date.
- Assuming the threshold settles the entire return: It addresses a specific Section 112A calculation, not every factor in an individual’s final tax liability.
- Relying on one account statement: Multiple brokers, demat accounts or fund platforms can leave transactions out of the annual total.
- Including non-qualifying assets: A long holding period alone does not place an asset within Section 112A.
Records to keep when you sell in stages
Maintain a year-wise transaction file rather than relying on memory at filing time. At minimum, retain:
- Contract notes or trade confirmations showing the transfer date and consideration.
- Broker and fund statements for every account used during the year.
- Purchase records needed to establish the relevant gain and holding period.
- Evidence relevant to the security category and applicable Securities Transaction Tax conditions.
- A working schedule that lists each qualifying gain and the annual total before the ₹1,25,000 threshold.
Reconcile the schedule to your broker statements before preparing the return. If a statement reports a transaction without clearly identifying its tax category, obtain the underlying details instead of automatically treating it as Section 112A.
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What the threshold does—and does not—mean
It can reduce the amount exposed under Section 112A
When the annual aggregate of qualifying gains exceeds ₹1,25,000, the amount above the threshold is the relevant excess for the Section 112A calculation. In the illustration, that excess is ₹25,000.
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It does not guarantee zero tax for every investor
The threshold is not a promise that your final return will show no tax. The asset must qualify, the gain must be calculated correctly, the transfer date determines the applicable rate distinction, and other items in your tax computation may affect the final outcome.
It does not authorize a second threshold
There is no additional ₹1,25,000 merely because a second sale occurred, a different broker was used or the investment was split into smaller lots within the same financial year.
When professional help is sensible
Consider qualified tax advice when you have transactions around 23 July 2024, holdings spread across several platforms, uncertain security classification, substantial gains, or records that do not reconcile. Residency, other income and transaction-specific facts can change the final computation even when the aggregate rule is straightforward.
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Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →For FY 2025-26, the departmental figure to start with is ₹1,25,000 for the year’s qualifying Section 112A gains. Apply it once to the annual aggregate, then determine the applicable transfer-date treatment and complete the rest of the return using your actual facts.
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