LTCG Tax on Indian Stocks: The Complete Calculator Guide (FY 2026)

March 31 arrives the same way every year — suddenly. If you've had a good year in the market, you're staring at a capital gains tax bill you weren't quite tracking. If you've had a bad year, you might be sitting on losses you could have used to legally reduce that bill, and didn't. This guide makes sure neither happens to you again.

What Counts as Long-Term Capital Gains on Indian Stocks?

For listed equity shares and equity mutual funds in India, the holding period threshold is 12 months. Hold for more than 12 months from the date of purchase, sell at a profit, and those gains are classified as Long-Term Capital Gains (LTCG) under Section 112A of the Income Tax Act.

Hold for 12 months or less — even by one day — and the gains become Short-Term Capital Gains (STCG), taxed at a higher rate.

Asset Type	Holding Period for LTCG	LTCG Tax Rate (FY26)
Listed equity shares (NSE/BSE)	> 12 months	12.5% above ₹1.25L
Equity mutual funds	> 12 months	12.5% above ₹1.25L
Debt mutual funds (post Apr 2023)	Any period	Slab rate (no LTCG benefit)
REITs/InvITs	> 36 months	12.5% above ₹1.25L

LTCG Tax Rate for FY 2025-26

The Finance Act 2024 (Budget 2024) revised LTCG rates effective August 23, 2024:

• Rate: 12.5% (reduced from the earlier 10%)
• Exemption: First ₹1.25 lakh of LTCG in a financial year is completely exempt — no tax
• No indexation: Equity LTCG has never had indexation benefit (indexation is for debt/property)
• STT mandatory: The transaction must have STT (Securities Transaction Tax) paid — which it does automatically on NSE/BSE trades

So your effective LTCG for FY 2025-26: (Total LTCG − ₹1,25,000) × 12.5%. If your total LTCG is below ₹1.25L, your tax bill is ₹0.

Step-by-Step: How to Calculate Your LTCG

Let's use a concrete example. Priya bought 500 shares of Infosys at ₹1,200 in March 2024. She sold them in April 2026 at ₹1,800. Holding period: ~25 months. This qualifies as LTCG.

Step	Calculation	Amount
Sale proceeds	500 shares × ₹1,800	₹9,00,000
Cost of acquisition	500 shares × ₹1,200	₹6,00,000
Gross LTCG	₹9,00,000 − ₹6,00,000	₹3,00,000
Exemption	First ₹1.25L is tax-free	−₹1,25,000
Taxable LTCG	₹3,00,000 − ₹1,25,000	₹1,75,000
LTCG tax @ 12.5%	₹1,75,000 × 12.5%	₹21,875

Plus 4% health and education cess on the tax amount: ₹21,875 × 1.04 = ₹22,750 total tax payable.

The Grandfathering Rule: Stocks Bought Before January 31, 2018

This is where most investors leave money on the table. When LTCG tax on equities was reintroduced in Budget 2018 (it was abolished in 2004), the government provided a grandfather clause: for shares held before January 31, 2018, the cost of acquisition is deemed to be the higher of your actual purchase price or the Fair Market Value (FMV) as on January 31, 2018.

The FMV on January 31, 2018 for listed shares = the highest traded price on that date on the exchange.

Example: Rohan bought Reliance Industries at ₹600 in 2015. The highest price of Reliance on Jan 31, 2018 was ₹960. He sells in 2026 at ₹2,900. His deemed cost of acquisition = ₹960 (higher of ₹600 actual and ₹960 FMV). His taxable gain = ₹2,900 − ₹960 = ₹1,940 per share — not ₹2,300. Without knowing this rule, he'd overpay by ₹360 × 12.5% = ₹45 per share in tax.

You can find January 31, 2018 prices on NSE or BSE historical data pages.

LTCG Harvesting: How to Use the ₹1.25L Exemption Every Year

The ₹1.25L exemption is per financial year and does not carry forward. If you don't use it, you lose it. The tax-efficient strategy: book ₹1.25L of long-term gains every year, even if you want to continue holding the position.

The mechanics (and this is legal — India has no wash-sale rule):

1. Identify your long-term holdings with gains approaching or exceeding ₹1.25L
2. Sell sufficient quantity to realise exactly ₹1.25L in LTCG (tax-free)
3. Immediately repurchase the same shares at the current market price
4. Your new cost basis resets to the current higher price — reducing future tax liability
5. You've crystallised ₹1.25L of gains tax-free, and your holding continues

Over 10 years, this strategy alone can save ₹1,56,250 in LTCG tax (₹1.25L × 12.5% × 10 years = ₹1.5625L) on a portfolio that would have otherwise crossed the exemption threshold anyway.

LTCG vs STCG: Which Should You Optimise First?

STCG (Short-Term Capital Gains) is taxed at 20%. LTCG is taxed at 12.5%. If you have both profits and losses in your portfolio:

• LTCG losses can only be set off against LTCG gains (not STCG gains)
• STCG losses can be set off against both STCG gains and LTCG gains
• Remaining losses can be carried forward for 8 years

Priority: First use STCG losses to offset STCG gains (saving 20%). Then use any remaining STCG losses against LTCG gains (saving 12.5%). LTCG losses can only go against LTCG gains. Never let STCG losses go unused — they're more valuable than LTCG losses.

Common Mistakes That Increase Your LTCG Bill

• Ignoring STT in cost basis: STT paid on purchase can be included in cost — most people forget this
• Missing the grandfathering rule: Especially relevant for stocks held since pre-2018; check Jan 31, 2018 FMV
• Not booking the annual ₹1.25L exemption: If you're holding long-term positions with large gains, you're leaving tax savings on the table every year
• Selling at 11 months 29 days: Waiting those extra 2 days reduces your tax rate from 20% to 12.5%. Calendar awareness matters
• Advance tax miscalculation: LTCG above ₹1.25L requires advance tax payment. Missing the September 15 installment (45% of estimated annual tax) attracts 1% per month interest under Section 234B/C

How stoicHQ's Tax Engine Does This Automatically

Upload your Zerodha P&L statement or CAMS consolidated account statement, and stoicHQ's tax engine computes your exact LTCG and STCG position in real time. It flags the grandfathering rule where applicable, surfaces tax-loss harvesting opportunities before March 31, and tells you exactly how much LTCG you can book tax-free before crossing the ₹1.25L threshold. No spreadsheets, no manual calculation, no March 31 panic.

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FAQ

Is LTCG applicable on SIP mutual funds in India?

Yes. Each SIP instalment is treated as a separate purchase with its own holding period. Units from an SIP instalment paid more than 12 months ago qualify as LTCG when redeemed. Units less than 12 months old are STCG. This is why FIFO (First In, First Out) accounting matters for SIP redemptions.

What is the LTCG tax rate on equity mutual funds?

Same as direct equity shares: 12.5% on gains above ₹1.25 lakh per financial year, for units held more than 12 months. Debt mutual funds (purchased after April 1, 2023) are taxed at slab rates regardless of holding period — no LTCG benefit.

Do I need to pay LTCG tax if gains are below ₹1.25 lakh?

No. The first ₹1.25 lakh of long-term capital gains from equity and equity mutual funds in a financial year is completely exempt under Section 112A. You pay zero tax on gains up to this threshold. You still need to report these gains in your ITR.

Can I set off LTCG against LTCG losses?

Yes. Long-term capital losses from equity can be set off against long-term capital gains from equity. They cannot be set off against short-term capital gains or any other income. Unused LTCG losses can be carried forward for 8 assessment years.

When do I need to pay advance tax on LTCG?

If your estimated total tax liability for the year exceeds ₹10,000, advance tax applies. Key installment dates: June 15 (15%), September 15 (45% cumulative), December 15 (75% cumulative), March 15 (100%). Missing these attracts interest at 1% per month under Sections 234B and 234C. For salaried individuals where TDS covers most liability, only the LTCG portion creates advance tax obligation.