LTCG / STCG Tax Calculator
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Tunafanya kazi kwenye mwongozo wa kielimu wa kina wa LTCG & STCG Calculator (Equity). Rudi hivi karibuni kwa maelezo ya hatua kwa hatua, fomula, mifano halisi, na vidokezo vya wataalamu.
Capital gains tax in India on equity investments and equity mutual funds is divided into two categories based on the holding period: Short Term Capital Gains (STCG) and Long Term Capital Gains (LTCG). For listed equity shares and equity-oriented mutual funds, the holding period threshold is 12 months — if you hold for 12 months or less, gains are classified as STCG and taxed at 15%; if you hold for more than 12 months, gains are classified as LTCG and taxed at 10% on gains exceeding ₹1 lakh per financial year (without the benefit of indexation). The LTCG tax of 10% on equity was reintroduced in Budget 2018 (Finance Act 2018, effective April 1, 2018) after a gap of 14 years during which LTCG on equity was completely exempt. To avoid retrospective taxation, a 'grandfathering' provision was included: for shares/units purchased before January 31, 2018, the cost of acquisition is deemed to be the higher of the actual purchase price or the Fair Market Value (FMV) as on January 31, 2018 (typically the closing price on NSE/BSE or NAV for mutual funds). Note: Budget 2024 (effective July 23, 2024) increased LTCG tax on equity from 10% to 12.5% and STCG from 15% to 20% for transactions after July 23, 2024. For FY 2024-25, both the old rates (pre July 23) and new rates (post July 23) apply based on the date of sale. Securities Transaction Tax (STT) must have been paid on the transaction for these rates to apply.
STCG Tax = STCG Amount × 20% (post July 23, 2024) or 15% (before July 23, 2024); LTCG = Sale Price - Max(Purchase Price, FMV on Jan 31 2018); LTCG Tax = Max(0, LTCG - ₹1,00,000) × 12.5% (post July 23) or 10% (before July 23)
- 1Determine the date of purchase and sale for each equity transaction; if the holding period is up to 12 months, it is STCG; more than 12 months is LTCG.
- 2For STCG (held ≤ 12 months): compute gain = Sale Price − Purchase Price (no indexation); apply 20% tax (post July 23, 2024) or 15% (pre July 23, 2024); STCG is added to total income for the year.
- 3For LTCG (held > 12 months): apply grandfathering for shares/units purchased before January 31, 2018 — cost = higher of actual cost or FMV on January 31, 2018; compute LTCG = Sale Price − Adjusted Cost.
- 4For FY 2024-25, the ₹1 lakh annual LTCG exemption applies to total LTCG across all equity investments for the year (shares + equity MFs); only LTCG above ₹1 lakh is taxed at 12.5% (post July 23) or 10% (pre July 23).
- 5Securities Transaction Tax (STT) must have been paid on both purchase and sale of listed equity for these preferential tax rates to apply; off-market transactions or unlisted shares attract different rates.
- 6Set-off rules: STCL (Short Term Capital Loss) can be set off against both STCG and LTCG; LTCL (Long Term Capital Loss) can only be set off against LTCG (not STCG); unabsorbed losses can be carried forward for 8 years.
- 7Compute net capital gains after set-offs; add STCG to total income; apply LTCG tax on LTCG above ₹1 lakh; report in ITR Schedule CG.
Entire ₹70,000 LTCG exempt as it is within the ₹1 lakh annual threshold
Sale is after July 23, 2024, so 12.5% rate applies — but LTCG of ₹70,000 is below the ₹1 lakh exemption limit. No LTCG tax payable. The ₹1 lakh exemption applies to the net LTCG from all equity transactions in the year.
Post July 23, 2024 sale attracts 12.5% on taxable LTCG; no surcharge if total income < ₹50L
Total LTCG = ₹1,80,000. After the ₹1L exemption, taxable LTCG = ₹80,000. Tax = ₹80,000 × 12.5% = ₹10,000. Add 4% cess = ₹10,400 total LTCG tax.
Without grandfathering, LTCG would be ₹3,50,000 — grandfathering saved ₹1,25,000 × 10% = ₹12,500 tax
May 2024 sale is before July 23, 2024 budget change — 10% rate applies. Grandfathered cost = ₹450 (Jan 31, 2018 price). LTCG = ₹2,25,000; after ₹1L exemption, taxable = ₹1,25,000; Tax = ₹12,500.
STCG is added to total income; taxed at 20% flat (no ₹1L exemption available for STCG)
Sale in October 2024 is after July 23, 2024 — new 20% STCG rate applies (up from 15%). STCG of ₹90,000 is taxed at flat 20%, plus 4% cess. There is no exemption for STCG — unlike LTCG which has ₹1L annual exemption.
Investors computing tax liability on equity portfolio redemptions before deciding the optimal time to sell.
Annual tax-loss harvesting — realising LTCG up to ₹1 lakh tax-free and/or booking losses to offset gains.
Financial planners comparing the post-tax returns of equity MFs vs debt funds vs FDs for client portfolios.
Chartered accountants computing Schedule CG (Capital Gains) in ITR for clients with multiple equity transactions.
Portfolio rebalancing decisions — understanding when to sell equity (after 12 months for LTCG treatment) and choosing the most tax-efficient exit timing.
Equity Savings Scheme — Partial Tax Benefits
Equity Savings Schemes in mutual funds invest in equity (40%+), arbitrage (20%+), and debt. They are taxed as equity mutual funds (LTCG/STCG rates apply). The equity and arbitrage portions benefit from the preferential equity tax rates. These schemes suit investors wanting equity taxation status with lower market volatility.
LTCG on ESOPs/RSUs
For listed company ESOPs, shares acquired on exercise are treated as equity. Holding period for LTCG starts from the date of exercise (allotment), not the grant date. The cost is the FMV on exercise date (which is also used to compute the perquisite taxed as salary at exercise). Gains from sale above the exercise price FMV are LTCG or STCG based on 12-month holding from exercise.
LTCG Harvesting Strategy
Investors can strategically 'harvest' LTCG every year to utilise the ₹1 lakh annual exemption — redeem equity fund units where the LTCG is up to ₹1 lakh and immediately reinvest. This resets the cost basis at a higher price, reducing future taxable LTCG. Over 10+ years, this annual harvesting can save several lakhs in LTCG tax. This works best in a rising market.
Surcharge on LTCG for High Earners
LTCG from equity is subject to surcharge if total income exceeds ₹50 lakh. However, surcharge on LTCG from specified long-term assets (equity shares, equity MFs) is capped at 15% — even if your income would normally attract 25% or 37% surcharge (under old regime). This cap significantly reduces the effective LTCG tax rate for high-income earners on their equity gains.
| Type | Holding Period | Tax Rate (Pre Jul 23, 2024) | Tax Rate (Post Jul 23, 2024) | Exemption |
|---|---|---|---|---|
| STCG — Listed Equity/Equity MF | ≤ 12 months | 15% | 20% | None |
| LTCG — Listed Equity/Equity MF | > 12 months | 10% | 12.5% | ₹1 lakh/year |
| STCG — Debt MF/Bonds | ≤ 36 months | Slab rate | Slab rate | None |
| LTCG — Debt MF/Bonds | > 36 months | 20% with indexation | Slab rate (Budget 2023 change) | None |
| STCG — Real Estate | ≤ 24 months | Slab rate | Slab rate | None |
| LTCG — Real Estate | > 24 months | 20% with indexation | 12.5% without indexation (Budget 2024) | Reinvestment exemptions (54, 54EC) |
What are the LTCG and STCG tax rates on equity for FY 2024-25?
For transactions before July 23, 2024: STCG at 15%, LTCG at 10% (above ₹1L exemption). For transactions on or after July 23, 2024 (Budget 2024 effective date): STCG at 20%, LTCG at 12.5% (above ₹1L exemption). Note: The ₹1 lakh annual LTCG exemption remains unchanged. STT must have been paid on the transactions for these preferential rates.
How does the ₹1 lakh LTCG exemption work?
The ₹1 lakh annual exemption applies to the total LTCG from all equity investments (shares + equity mutual funds) in a financial year. Only the LTCG exceeding ₹1 lakh is taxed at 10% (pre July 23) or 12.5% (post July 23). This exemption is per taxpayer per financial year — not per stock or fund. Strategically, you can spread redemptions across financial years to stay within the ₹1 lakh annual limit and avoid LTCG tax.
What is the grandfathering clause in equity LTCG?
Budget 2018 reintroduced LTCG tax on equity with a grandfathering provision to prevent retrospective taxation. For assets acquired before February 1, 2018, the cost of acquisition is the higher of: (a) the actual purchase price, or (b) the lower of (i) the highest price of the asset on NSE/BSE on January 31, 2018 (or NAV for MFs) and (ii) the actual sale price. This means gains accrued up to January 31, 2018 are effectively exempt.
Can LTCG losses be set off against other income?
No. Capital losses (both STCL and LTCL) cannot be set off against income from other heads like salary, business, or other sources. STCL can be set off against STCG or LTCG from any asset. LTCL can only be set off against LTCG — not against STCG. Unabsorbed capital losses can be carried forward for 8 assessment years and set off in subsequent years (must file ITR before due date to carry forward losses).
Is SIP in equity mutual funds treated as a single investment for LTCG?
No. Each SIP instalment is treated as a separate purchase with its own purchase date and cost. When you redeem units, the FIFO (First In, First Out) method is used — the oldest units are deemed to be sold first. For a monthly SIP started in January 2022, units from January 2022 become long-term after January 2023, February 2022 units after February 2023, and so on. This makes LTCG tracking complex for SIP investors.
Do dividends from equity funds attract LTCG or STCG?
No. Dividends from equity mutual funds are not capital gains — they are taxed as 'Income from Other Sources' at the investor's slab rate (since April 2020, dividends are no longer tax-free). TDS at 10% is deducted on dividends exceeding ₹5,000 per year from a single AMC. For LTCG/STCG purposes, only the actual gain on redemption of units (sale price minus cost) is considered.
How is LTCG from NPS equity investments taxed?
Gains from NPS equity funds are not subject to the regular equity LTCG rules while the money remains in NPS. At withdrawal (retirement), 60% of the corpus can be taken as a tax-free lump sum under Section 10(12A), and 40% must be annuitised (pension taxable). NPS investments are in a trust — they don't generate taxable capital gains during the accumulation phase.
What is Securities Transaction Tax (STT) and how does it relate to LTCG?
STT is a tax levied on every buy and sell transaction in listed securities on recognised stock exchanges. The preferential LTCG rate (10%/12.5%) and STCG rate (15%/20%) on equity apply only if STT was paid at the time of purchase and sale. If STT was not paid (e.g., off-market transfers, unlisted shares), normal capital gains tax rates apply: STCG at slab rate, LTCG at 20% with indexation (for shares held 24+ months).
Kidokezo cha Pro
Start LTCG harvesting from the first year your equity portfolio shows gains above ₹1 lakh. Redeem units equal to ₹1 lakh of LTCG each March (before March 31) and reinvest immediately. This annual reset of cost basis is completely legal, has zero TDS implication (below ₹1L threshold), and over a 20-year equity investment, can save ₹2-4 lakh in cumulative LTCG tax.
Je, ulijua?
When LTCG tax on equity was first abolished in 2004 by Finance Minister P. Chidambaram, India's stock market BSE Sensex was at approximately 6,000 points. By January 31, 2018 (the grandfathering date when LTCG was reintroduced), the Sensex was at 35,965 — a 6x increase. The grandfathering provision effectively made the entire pre-2018 equity gains tax-free, protecting investors from retroactive taxation on a decade of market gains.