Deep guide · Tax
Long-term capital gains (LTCG) calculator
Buy for ₹₹1,00,000, sell for ₹₹1,50,000, pay ₹₹5,000 in transfer expenses along the way, and once the holding period genuinely qualifies as long-term, the gain works out to ₹45,000. On listed equity or equity mutual funds, tax above the annual exemption threshold at a commonly cited flat rate comes to roughly ₹4,500, leaving net proceeds of about ₹1,40,500.
That said, the rate, the exemption limit, the indexation rules, and even the holding-period thresholds have each been rewritten in recent Union Budgets, so treat the numbers below as the current mechanics, not a permanent fact — check the figure for your actual financial year before filing.
How the gain is worked out, and what counts as “long-term”
- Capital gain = Sale price − Purchase price (or indexed cost, where applicable) − Transfer expenses = ₹150000 − ₹100000 − ₹5000 = ₹45,000.
- Confirm the asset actually crossed its long-term holding threshold — this differs by asset class.
- For equity and equity funds: subtract the annual exemption threshold from the gain, then apply the flat rate to what remains. For property and most other assets: apply indexation to the cost (where currently available) before applying the applicable rate.
The threshold that decides “long-term” itself varies by what you sold:
| Asset type | Commonly cited long-term threshold |
|---|---|
| Listed equity shares / equity mutual funds | More than 12 months |
| Debt mutual funds | Rules have changed in recent years — verify current treatment |
| Immovable property (land, buildings) | More than 24 months |
| Unlisted shares | More than 24 months |
These thresholds get revised in Union Budgets too, so an outdated one is an easy way to misclassify a gain as short-term when it should be long-term, or the reverse — which changes both the rate and whether indexation or the exemption threshold even applies.
Indexation: adjusting the cost for inflation
Indexation raises the original purchase price to account for inflation between the year you bought and the year you sold, using the government's published Cost Inflation Index (CII) for each financial year. The indexed cost is the original cost multiplied by the ratio of the CII in the sale year to the CII in the purchase year, and it's this larger figure — not the nominal purchase price — that gets subtracted from the sale price to find the taxable gain. On an asset held for decades, particularly property, this can shrink the taxable gain substantially, which is exactly why its availability matters so much to the final number. It hasn't stayed universal, though: certain debt instruments and some property transactions have had indexation withdrawn or made optional (paired with a lower flat rate instead) in recent budgets, so confirm eligibility for your specific asset and transaction date before leaning on an indexation-based estimate.
The annual exemption on equity gains
Long-term gains on listed equity and equity mutual funds carry a widely cited annual exemption — a set amount of long-term equity gains in a financial year that isn't taxed at all, with the flat rate applying only above it. It's a combined limit across every eligible long-term equity gain in the year, not a per-transaction or per-asset allowance, so five smaller gains use it up exactly as one large gain would. Because it resets each financial year, investors who control the timing of a sale sometimes spread a large gain across two financial years specifically to use the exemption twice — a reasonable move as long as it's supporting an investment decision you'd have made anyway, not driving one you wouldn't.
A full worked example
Say an investor bought equity mutual fund units for ₹₹1,00,000, held them past two years, and sold for ₹₹1,50,000, paying ₹₹5,000 in transaction charges.
- Holding period check: more than 12 months, so the units qualify for long-term treatment.
- Gain: ₹150000 (sale) − ₹100000 (purchase) − ₹5000 (expenses) = ₹45,000.
- Exemption: if this is the only long-term equity gain realised this year, apply the annual exemption threshold (illustratively ₹1,00,000) — only the amount above it is taxable.
- Tax: illustratively, ₹45,000 × 10% (simplified, before netting out the exemption) ≈ ₹4,500.
- Net proceeds: roughly ₹150000 − ₹5000 − ₹4,500 = ₹1,40,500.
A property sale runs the same four steps, just with indexed cost substituted for the nominal purchase price where indexation is currently available, and a different rate applied at the end.
Equity, property, and debt aren’t taxed the same way
| Asset class | Typical tax treatment | Key consideration |
|---|---|---|
| STT-paid listed equity / equity mutual funds | Flat rate above an annual exemption threshold | Grandfathering may apply to gains accrued before a historical cutoff date |
| Immovable property | Flat rate, historically with indexation | Indexation availability has changed in recent budgets — verify current rule |
| Debt mutual funds | Rules reworked significantly in recent years | Some debt fund categories no longer receive traditional LTCG treatment |
| Unlisted shares | Flat rate, historically with indexation for residents | Longer long-term threshold (commonly more than 24 months) than listed equity |
“Long-term capital gains tax” isn't one number — the rate, whether indexation applies, and the exemption threshold all hinge on exactly what you sold and when you bought it.
A few situations that change the numbers
- Grandfathered equity gains. For listed equity bought before the grandfathering cutoff (commonly cited as January 31, 2018), the acquisition cost for tax purposes is generally the higher of the actual cost or the fair market value on that date — so gains that had already accrued by then aren't newly taxed.
- Inherited or gifted property. The holding period usually includes the previous owner's holding period, and the acquisition cost is generally the cost to the previous owner (or a specified base-year value for very old acquisitions), with indexation applied from when the asset was first acquired in the chain, not from the year you inherited it.
- Reinvestment exemptions. Certain sections of tax law have historically exempted LTCG on property, or other specified assets, if the proceeds go into a new residential property or specified bonds within a defined window. The conditions and caps have shifted over time, so check them before relying on this.
- NRI sellers and foreign assets. Holding-period and rate rules can differ, and withholding-tax or reporting obligations may apply on top — worth a cross-border tax specialist before finalising the sale.
Setting off long-term losses
Long-term capital losses can generally only be set off against long-term capital gains in the same financial year — unlike short-term losses, which can offset both short-term and long-term gains. If long-term losses exceed long-term gains for the year, the unabsorbed loss can typically be carried forward for a limited number of subsequent assessment years, provided the return for the loss year is filed by the due date. That asymmetry is easy to miss and worth building into the order you realise gains and losses within a year, not just the amounts.
Mistakes worth avoiding
- Assuming indexation automatically applies to every asset class — availability has changed for some categories in recent budgets.
- Treating the equity exemption threshold as per-transaction rather than a combined annual limit.
- Using the nominal purchase price instead of the fair market value on the grandfathering cutoff date for equity bought before it.
- Applying the wrong holding-period threshold for the asset class, which can misclassify a gain as short- or long-term.
- Missing the return filing deadline and forfeiting the right to carry forward an unabsorbed long-term loss.
Key takeaways
- Gain: ₹150000 − ₹100000 − ₹5000 = ₹45,000.
- Illustrative tax at a commonly cited flat rate, after any exemption threshold: about ₹4,500 (verify the current rate and threshold).
- Long-term thresholds and rates differ meaningfully by asset class — equity, property, and debt aren't treated the same.
- Indexation and grandfathering can both cut the taxable gain, but eligibility for each has changed in recent budgets.
- Long-term losses can generally offset only long-term gains, not short-term gains, in the same financial year.
Frequently asked questions
- What is the LTCG tax on selling for ₹₹1,50,000 after buying for ₹₹1,00,000?
- The capital gain is ₹150000 − ₹100000 − ₹5000 (expenses) = ₹45,000. For long-term gains on listed equity or equity mutual funds, a commonly cited flat rate (applied above an annual exemption threshold) gives illustrative tax of about ₹4,500 — always verify the current rate and exemption limit, since both have changed in recent budgets.
- What holding period makes a gain "long-term" instead of "short-term"?
- For listed equity shares and equity-oriented mutual funds, holding for more than 12 months before selling classifies the gain as long-term. For most other assets — unlisted shares, debt instruments, and immovable property — the long-term threshold is typically longer, commonly more than 24 or 36 months depending on the asset class and current rules.
- Is there a tax-free exemption on long-term capital gains from equity?
- A commonly cited exemption has historically allowed a certain amount of long-term equity gains each financial year to go untaxed, with tax applying only to gains above that threshold (illustratively around ₹1,00,000). This threshold has been adjusted in recent budgets, so confirm the figure applicable to your specific financial year rather than assuming a fixed number.
- What is indexation and how does it reduce LTCG tax?
- Indexation adjusts the original purchase cost of an asset upward to account for inflation between the purchase year and the sale year, using a government-published Cost Inflation Index (CII). A higher indexed cost reduces the taxable gain, and historically applied to long-term gains on property and certain debt instruments taxed at a higher headline rate — though eligibility for indexation has changed for some asset classes in recent budgets.
- What is the "grandfathering" rule for equity LTCG?
- When long-term capital gains tax was reintroduced on listed equity after a period of exemption, a grandfathering provision allowed gains accrued up to a specific cutoff date (commonly cited as January 31, 2018) to remain untaxed — only the appreciation after that date is treated as taxable gain, computed by using the higher of the actual cost or the fair market value on the cutoff date as the effective acquisition cost.
- Does LTCG on property get taxed the same way as LTCG on equity?
- No — long-term gains on immovable property have historically been taxed differently from equity, often at a different headline rate and, depending on current rules, with or without the benefit of indexation. Because the treatment of property LTCG has been revised in recent budgets, including changes to whether indexation remains available, always confirm the current rule before estimating tax on a property sale.
- Can long-term capital losses be set off against other gains?
- Yes — long-term capital losses can generally be set off only against long-term capital gains (not short-term gains) in the same financial year, and unabsorbed long-term losses can typically be carried forward for a limited number of subsequent years, provided the return for the loss year is filed by the due date.
- How is the acquisition cost determined for an inherited or gifted asset?
- For inherited or gifted assets, the holding period is generally computed by including the previous owner’s holding period, and the acquisition cost is typically taken as the cost to the previous owner (or, for very old acquisitions, the fair market value on a specified base date), rather than the value on the date of inheritance or gift.
- Does selling multiple long-term assets in one year combine for the exemption threshold?
- Where an annual exemption threshold applies to long-term equity gains, it is typically a combined limit across all eligible long-term equity gains realised in that financial year, not a separate allowance per transaction or per asset — so multiple smaller gains can collectively use up the exemption just as one large gain would.
Putting it together
The tax you actually owe depends on the real gain, whether the holding period genuinely clears the long-term bar for that specific asset, whether an exemption threshold or indexation currently applies, and which flat rate is in force for the year of sale — every one of those has moved in recent Union Budgets, which is why this page explains the mechanics rather than asserting a fixed number. Good record-keeping — exact acquisition dates and costs, transfer expenses, and fair market values on key cutoff dates — will do more for the accuracy of your final figure than any single rate assumption. Verify the current rate, threshold, and indexation rule before filing.
Methodology and assumptions
Figures are computed live from the purchase price, sale price, and expenses you entered (or illustrative defaults), using a commonly cited flat LTCG rate for equity as of recent tax years, without modelling indexation or grandfathering explicitly. This is general educational information, not tax advice — consult a qualified tax professional or chartered accountant for your specific situation, and verify current rates, thresholds, and indexation rules with the Income Tax Department.
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Not tax advice. Capital gains tax rates, exemption thresholds, and indexation rules change; verify current figures with a qualified tax professional or the Income Tax Department before filing.