Long Term Capital Gains Tax (LTCG) – Tax on Long-term capital gains on equity funds (2024)

FAQs

Long Term Capital Gains Tax (LTCG) – Tax on Long-term capital gains on equity funds? ›

Long-term capital gains tax rates for the 2024 tax year

You make long-term capital gains on selling your equity fund units after holding them for over one year. These capital gains of up to Rs 1 lakh a year are tax-exempt. Any long-term capital gains exceeding this limit attracts LTCG tax at 10%, without indexation benefit.

By implementing tax harvesting, you can strategically manage your equity mutual fund holdings to keep long-term returns below the Rs. 1 lakh threshold, thus avoiding long-term capital gains tax upon redemption.

Long term capital gain on share is calculated by deducting the sale price and cost of acquisition of an asset that has been held for more than 12 months by an investor.

Assets held for one year or less are subject to short-term capital gains taxes, while assets held for longer than one year are subject to long-term capital gains taxes. Long-term capital gains are typically taxed at lower rates, meaning there may be a benefit to holding onto your assets for longer before you sell them.

So STCG at 15% applies to capital gains from Equity Mutual Fund units held for 12 months or less. For a holding period exceeding 12 months, capital gains from Equity Mutual Funds are treated as LTCG. The LTCG rate, in this case, is 10% of cumulative capital gains over Rs. 1 lakh for a financial year.

Even if the value of your stocks goes up, you won't pay taxes until you sell the stock. Once you sell a stock that's gone up in value and you make a profit, you'll have to pay the capital gains tax. Note that you will, however, pay taxes on dividends whenever you receive them.

Long-Term Capital Gains (LTCG) on shares and equity-oriented mutual funds in India are taxed at a 10% rate (plus surcharge and cess) if they reach Rs. 1 lakh in a fiscal year. LTCG is defined as profits on the sale of shares or equity-oriented mutual funds held for more than a year.

Long-term capital gains on mutual funds are available when you sell your equity shares after holding on to them for more than a year. When your long-term capital gains are above Rs 1 lakh, you will have to bear taxes on them. The LTCG on mutual funds tax rate is 10% with no indexation benefit.

The profit of Rs 1,60,000 (200*1800 – 200*1000) is called long-term capital gains. You have to pay the long-term capital gains tax on the gains that are above Rs 1 lakh in a financial year. You have the LTCG tax on Rs 60,000. (Rs 1,60,000 – Rs 1,00,000) at 10%.

How to calculate long-term capital gain on equity mutual fund? ›

Long-term capital gain = Final Sale Price - (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where the indexed cost of acquisition equals the cost of acquisition x cost inflation index of transfer/cost inflation index of acquisition.

Long-term capital gains tax is a tax applied to assets held for more than a year. The long-term capital gains tax rates are 0 percent, 15 percent and 20 percent, depending on your income. These rates are typically much lower than the ordinary income tax rate.

Capital gains up to Rs 1 lakh per year are exempted from capital gains tax. Long-term capital gain tax rate on equity investments/shares will continue to be charged at 10% on the gains. On the other hand, short-term capital gains tax on shares or equity investments will be charged at 15%.

Capital Gains Tax for People Over 65. For individuals over 65, capital gains tax applies at 0% for long-term gains on assets held over a year and 15% for short-term gains under a year. Despite age, the IRS determines tax based on asset sale profits, with no special breaks for those 65 and older.

The taxation of capital gains places a double tax on corporate income. Before shareholders face taxes, the business first faces the corporate income tax.

Under current IRS regulations, capital gains distributions from mutual fund or ETF holdings are taxed as long-term capital gains, no matter how long the individual has owned shares of the fund.

In India, shares long term capital gains tax (LTCG) and equity-oriented mutual funds incur a 10% tax (plus surcharge and cess) if they surpass Rs. 1 lakh in a fiscal year. LTCG applies to profits from the sale of shares or equity-oriented mutual funds held for over a year.

Mutual Funds classified as equity funds have an equity exposure of at least 65%. As previously stated, when you redeem your equity fund units within a holding period of one year, you realize short-term capital gains. Regardless of your income tax bracket, these gains are taxed at a flat rate of 15%.

Long-term capital gain = Final Sale Price - (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where the indexed cost of acquisition equals the cost of acquisition x cost inflation index of transfer/cost inflation index of acquisition.