Question 1

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

Accepted Answer

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.

Question 2

LTCG vs STCG: Master Capital Gains Rate Table

Accepted Answer

Every asset class, holding period, tax rate, and exemption, post Budget 2024 changes effective July 23 2024. The rate changes are the most significant in a decade. Know your asset, know your rate before you sell. BUDGET 2024 KEY CHANGES (Jul 23, 2024): LTCG on equity: 10% → 12.5%. STCG on equity: 15% → 20%. Exemption limit: ₹1L → ₹1.25L (LTCG equity only). Property LTCG: indexation removed for new purchases (but taxpayer can choose 12.5% without indexation OR 20% with indexation, pick whichever is lower for pre-Jul 2024 purchases). Holding period, what is "long term": Equity shares / equity MF: 12 months. Property / unlisted shares: 24 months. Debt MF / bonds / gold (physical): 24 months (now irrelevant since slab rate applies). SGB: held to maturity (8 years) = FULLY exempt. STT (Securities Transaction Tax): Equity LTCG and STCG at concessional rates (12.5%/20%) apply ONLY if STT was paid at time of sale (i.e. sold on a recognised stock exchange). Off-market equity sale without STT → slab rate, not 12.5%/20%.

Question 3

How unlisted equity gains are taxed: LTCG vs STCG and the 24-month rule

Accepted Answer

Unlisted equity (shares of private companies, pre-IPO shares) has a different tax treatment from listed equity: LTCG (held 24+ months): 12.5% without indexation, same rate as listed equity from Budget 2024. This is a significant improvement from pre-2024 when unlisted LTCG was taxed at 20% with indexation. STCG (held less than 24 months): Taxed at slab rate (not the 20% flat rate for listed equity). For a 30% slab investor, this means STCG on unlisted shares = 30.9% + surcharge. Much worse than listed equity STCG. Practical implication: Hold unlisted shares for 24 months before selling. The tax difference between selling at 23 months vs 25 months can be enormous, 30.9% vs 12.5%.

Question 4

HUF and LTCG: capital gains planning with HUF

Accepted Answer

HUF can invest in equity and mutual funds. It gets its own ₹1.25L LTCG exemption on equity (Budget 2024). If you've already used your personal ₹1.25L LTCG exemption, the HUF can harvest another ₹1.25L of gains tax-free, that's ₹2.5L combined LTCG harvesting every year. HUF can also claim Sec 82, Income-tax Act 2025 (old Sec 54) exemption on property reinvestment, if HUF sells a house and reinvests in another house within 2 years, LTCG is exempt. This doubles the family's Sec 82 (old Sec 54) capacity.

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Sold shares or funds? Pay only what you owe.