What is a Long-Term Capital Gain (LTCG)?

Capital gains are classified based on the holding period. Long-Term Capital Gains (LTCG) include: 

Security TypeHolding PeriodTax Rate
Equity and equity-oriented mutual fundsMore than 1 year* 10% of gains exceeding Rs. 1 lakh
* Gains cannot be indexed
* Gains are calculated as per the
 grandfathering clause 
Debt mutual fundsNATreated as short-term capital gains and taxed as per your income tax slab
Listed bonds and debentured
More than 1 year10% of the gain, without indexation
Unlisted bonds and debenturesMore than 3 years20% of the gain, without indexation

For example, Ms Rani buys 100 Tata Motors shares at Rs. 500 per share (Rs. 50,000). She sells them after 2 years for Rs. 75,000. Her gain of Rs. 25,000 will be considered as an LTCG.

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