How to Calculate LTCG in India: Step-by-Step with Examples
Four worked examples for calculating LTCG in India: simple equity sale, with grandfathering, with prior LTCG already booked, and a loss scenario. Includes the exact formula.
LTCG formula for equity: (Selling price - Cost of acquisition or Jan 31 2018 FMV if higher) x tax rate. If total LTCG this FY is below Rs 1.25L, no tax. Above Rs 1.25L, tax is 12.5% on the excess. Add 4% cess on tax amount.
- Step 1: Calculate total gain = (sell price - buy price) x units
- Step 2: Apply grandfathering if applicable (bought before Feb 2018 -- use Jan 31 2018 FMV if higher than buy price)
- Step 3: Subtract Rs 1.25L exemption (less any LTCG already booked this FY)
- Step 4: Apply 12.5% rate on taxable gain, then add 4% cess
Calculating LTCG correctly is one of the most error-prone tasks in Indian tax filing. The rules sound simple -- 12.5% on gains above ₹1.25L -- but there are four variations that trip up even careful investors: grandfathering, accumulated exemption, loss scenarios, and the FY boundary. This guide walks through all four with real numbers.
The LTCG Formula
The base formula for equity LTCG tax:
LTCG Tax = (Total LTCG - ₹1,25,000) x 12.5% x 1.04 (cess)
Where Total LTCG = sum of all long-term capital gains from listed equity shares and equity mutual funds in the financial year.
This formula applies only when Total LTCG exceeds ₹1,25,000. If Total LTCG is at or below ₹1,25,000, tax = ₹0.
Example 1: Simple Equity Sale (No Grandfathering)
Meera bought 200 shares of HDFC Bank at ₹1,400 in March 2024. She sold them in May 2026 at ₹1,950. Holding period: ~26 months. LTCG applies.
| Step | Calculation | Amount |
|---|---|---|
| Sale proceeds | 200 x ₹1,950 | ₹3,90,000 |
| Cost of acquisition | 200 x ₹1,400 | ₹2,80,000 |
| Gross LTCG | ₹3,90,000 - ₹2,80,000 | ₹1,10,000 |
| Exemption | ₹1,10,000 below ₹1.25L threshold | Fully exempt |
| Tax payable | ₹0 | ₹0 |
Meera owes zero LTCG tax. Her ₹1,10,000 gain is within the annual exemption limit.
Example 2: With Grandfathering (Pre-February 2018 Purchase)
Vikram bought 500 shares of Infosys at ₹500 in 2014. The Jan 31, 2018 FMV (highest traded price that day) was ₹1,160. He sold in June 2026 at ₹1,900.
| Step | Calculation | Amount |
|---|---|---|
| Sale proceeds | 500 x ₹1,900 | ₹9,50,000 |
| Actual purchase price | 500 x ₹500 | ₹2,50,000 |
| Jan 31, 2018 FMV | 500 x ₹1,160 | ₹5,80,000 |
| Deemed cost (higher of actual or FMV) | ₹5,80,000 > ₹2,50,000 | ₹5,80,000 |
| Gross LTCG | ₹9,50,000 - ₹5,80,000 | ₹3,70,000 |
| Exemption | First ₹1.25L | -₹1,25,000 |
| Taxable LTCG | ₹3,70,000 - ₹1,25,000 | ₹2,45,000 |
| LTCG tax @ 12.5% | ₹2,45,000 x 12.5% | ₹30,625 |
| Add 4% cess | ₹30,625 x 1.04 | ₹31,850 |
Without grandfathering, Vikram's taxable gain would have been ₹7,00,000 - ₹1,25,000 = ₹5,75,000, tax = ₹71,875 after cess. Grandfathering saves him ₹40,025.
Example 3: Prior LTCG Already Booked This Year
Anjali booked ₹90,000 LTCG in April 2026 by selling some Axis Bank shares. She now wants to sell TCS shares and will make another ₹80,000 LTCG.
Key point: the ₹1.25L exemption applies to total LTCG for the year, not each transaction separately.
- LTCG already booked: ₹90,000
- Remaining exemption available: ₹1,25,000 - ₹90,000 = ₹35,000
- New LTCG from TCS sale: ₹80,000
- Taxable portion: ₹80,000 - ₹35,000 (remaining exemption) = ₹45,000
- Tax: ₹45,000 x 12.5% x 1.04 = ₹5,850
If Anjali had not tracked her prior LTCG bookings, she might incorrectly assume the new ₹80,000 gain is fully exempt. It is not -- the exemption was already partly used.
Example 4: Loss Scenario
Rahul has the following in FY 2025-26:
- LTCG from Reliance sale: ₹2,00,000
- LTCL (Long-Term Capital Loss) from Paytm sale (held 18 months): -₹60,000
Calculation:
- Net LTCG = ₹2,00,000 - ₹60,000 = ₹1,40,000
- Subtract exemption: ₹1,40,000 - ₹1,25,000 = ₹15,000 taxable
- Tax: ₹15,000 x 12.5% x 1.04 = ₹1,950
Note: LTCG losses can only offset LTCG gains, not STCG gains. If Rahul had STCG losses instead, those could have offset both his STCG and LTCG gains.
How to Find the January 31, 2018 FMV
For grandfathering, you need the January 31, 2018 closing price (highest traded price) for your stock. How to find it:
- Go to BSE India website: bseindia.com
- Go to "Market Data" (top menu) then "Historical Data"
- Select "Equity" and enter the company name or BSE code
- Enter date range: January 31, 2018 to January 31, 2018
- Download the data -- the "High" column shows the highest traded price on that date
Alternatively, NSE India historical data at nseindia.com shows the same data. Both are acceptable sources for ITR filing.
Common Calculation Mistakes
- Using closing price instead of highest traded price for FMV: The grandfathering provision uses the "highest price on January 31, 2018" -- not the closing price. In most cases they are similar, but for volatile stocks they can differ significantly.
- Applying exemption per transaction instead of per year: The ₹1.25L exemption is an annual aggregate limit, not a per-sale limit. Track your cumulative LTCG across all sales in the year.
- Forgetting to include equity MF LTCG in the aggregate: LTCG from equity mutual fund redemptions counts toward the same ₹1.25L limit as stock LTCG. They share the same exemption bucket.
- Not accounting for STT in cost basis: STT paid on purchase (0.1% on delivery buy) can technically be included in the cost of acquisition for LTCG calculation purposes.
Using stoicHQ's LTCG Calculator
For investors who find the calculation complex -- especially with grandfathering, multiple transactions, and losses -- stoicHQ's free LTCG Calculator at stoichq.in/tools/ltcg-calculator-india handles all four scenarios above. Enter your purchase price, date, Jan 31 2018 FMV (if applicable), and sale price. The calculator outputs taxable gain, tax amount, and cess in seconds, with full working shown.
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