Long Term Capital Gain (LTCG) on Listed Equity Shares refers to the profit earned from selling listed equity shares on a recognized stock exchange in India after holding them for more than 12 months. If these shares are sold after one year and the seller earns a gain, that profit is classified as a long-term capital gain.
As per current Indian tax laws, LTCG on listed equity shares is taxed at 10% if the total gain exceeds ₹1 lakh in a financial year. This rate is applicable without the benefit of indexation. Gains up to ₹1 lakh are exempt from tax, providing some relief to small investors.
LTCG applies only if the sale transaction is subject to Securities Transaction Tax (STT), which is generally the case for listed shares traded on platforms like NSE or BSE.
For small business owners and individual taxpayers, understanding LTCG is important for financial planning, tax filings, and staying compliant with income tax regulations. During ITR filing, such gains must be reported under the "Capital Gains" schedule, even if they are below the taxable threshold. Not reporting capital gains—even exempt ones—can lead to scrutiny from the Income Tax Department.
Proper record-keeping of purchase and sale transactions, along with broker statements, helps in accurately computing LTCG and avoiding errors in tax returns.
For detailed guidance on how LTCG affects your income tax liability and help with tax filing, visit FinTax24’s Income Tax Solutions.
Understanding LTCG is not just about compliance—it’s also key to making informed investment decisions that align with your long-term financial goals.