Tax
LTCG
Also known as: Long-Term Capital Gains
Tax on profits from long-held assets, taxed at lower rates, with a yearly exemption on equity gains.
LTCG applies to assets held beyond the long-term threshold, one year for listed equity and equity funds.
For equity, gains up to ₹1.25L a year are tax-free, and anything above is taxed at 12.5%.
Holding longer is rewarded with lower tax, which nudges investors toward patience.
For example
Book ₹1.5L long-term profit on equity funds in a year and only ₹25,000 is taxable, at 12.5%, since the first ₹1.25L is exempt.