Long-Term Capital Gain
A capital gain on an asset held beyond the qualifying period, taxed at a concessional rate.
Formula
Test: listed equity or equity-oriented fund units held for more than 12 months; the first ₹1.25 lakh of aggregate such gains in a year is exempt
Unit
₹
In depth
Long-term gains on listed equity were entirely exempt until 2018, when a concessional rate with a grandfathering provision was introduced; the exemption threshold and rate were both revised in July 2024. The annual exemption applies to aggregate gains across all such assets rather than per transaction, which makes it worth harvesting deliberately each year rather than letting gains accumulate. Long-term capital losses can be set off only against long-term gains, not against short-term ones, which is the asymmetry that governs the order in which positions should be realised. Rates change with budgets, so the schedule for the relevant year should always be checked.
Worked example
Aggregate long-term equity gains of ₹1,25,000 realised in a year fall within the exemption and attract no tax. Realising ₹3,00,000 instead makes ₹1,75,000 taxable, so spreading realisations across years has real value.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Long-Term Capital Gain” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.