TaxFinancial Glossary
LTCG (Long Term Capital Gains)
Definition
Tax levied on profits from selling a capital asset held beyond a specified period. For listed equity and equity mutual funds, the holding period is 12 months; for debt funds and real estate, it is 24 months. LTCG on equity above Rs 1.25 lakh per year is taxed at 12.5%.
Why It Matters
Understanding LTCG thresholds and rates directly affects your investment strategy. Selling equity investments just before the 12-month mark triggers 20% STCG instead of 12.5% LTCG with a Rs 1.25 lakh exemption. Timing your exits around these thresholds can save substantial tax.