LTCG on Equity Shares and Equity MF: 12.5% (Section 198, old 112A)

The most frequently triggered capital gains for salaried investors. Budget 2024 raised rate from 10% to 12.5% and raised the exemption from ₹1L to ₹1.25L. Both equity shares (held 12+ months on exchange) and equity mutual funds (65%+ equity, held 12+ months) qualify.

What qualifies for 12.5% LTCG: Listed equity shares on NSE/BSE (held 12+ months, STT paid at sale). Equity mutual funds where equity allocation ≥ 65% of portfolio (held 12+ months). Units of business trusts (REITs, InvITs), specific rules. ETFs tracking equity indices, same as equity MF. ₹1.25L exemption, how it works: Annual. Not per transaction. If total LTCG from equity in a year = ₹2L, taxable gain = ₹2L − ₹1.25L = ₹75,000. Tax = ₹75,000 × 12.5% = ₹9,375. The ₹1.25L exemption resets every April 1. Grandfathering for pre-Feb 2018 holdings: Shares/MF bought before February 1, 2018: cost = higher of actual purchase price or market price on January 31, 2018. This protected gains that accrued before the tax was introduced. Gains from before Jan 31, 2018 = completely exempt.