LTCG means long-term capital gains. It is the profit when you sell a capital asset you have held long enough for the law to call the gain long-term. The profit is the sale price, after a broker or transfer cost, minus what you paid and any cost of improvement. It is not the whole amount the buyer paid you.
How it works in FY 2026-27
Section 2(101) of the Income-tax Act, 2025 sets the clock. The usual line is 24 months. A listed security, a unit of an equity-oriented fund, a unit of the Unit Trust of India, or a zero-coupon bond uses 12 months. Sell on the anniversary and the gain is still short-term. One day later, it can be long-term.
For a sale from 23 July 2024 through 31 March 2027, most long-term gains are taxed at 12.5% under section 197. Listed equity and equity-fund units, when securities transaction tax was paid, are section 198. The rate is also 12.5%, but only on the gain above ₹1,25,000 in that year. The exemption is for the year of the sale. It is not a fresh allowance for every year you held the units. Gold, a house, and a debt fund do not get it.
Cess is 4% of the tax. A resident can set an unused nil slab against the gain. The section 156 rebate does not cancel tax under section 197 or 198. Salary inside the rebate can still leave a bill on shares.
Land or a building bought before 23 July 2024 can compare 12.5% with 20% after indexation. That choice is section 197(3), and only for a resident individual or a Hindu undivided family. Gold and shares do not get it.
A worked example
The capital gains calculator takes listed equity bought on 1 April 2022 for ₹1,00,000 and sold on 15 June 2026 for ₹4,00,000, with ₹15,00,000 of other income in the new regime. The gain is ₹3,00,000. The section 198 exemption used is ₹1,25,000. Tax on the gain before cess is ₹21,875. The extra tax on the return, cess included, is ₹22,750. Change the other income and the extra line can move, because surcharge looks at the whole return.
Mistakes people make
- Using the ₹1,25,000 exemption on gold, a house, or a debt fund.
- Calling a sale on the 12-month anniversary long-term. Section 2(101) still calls that short-term.
- Expecting section 156 to wipe this tax the way it can wipe slab tax.
- Applying the old 20% indexed rate to shares. That choice is only for certain land and buildings.
- Forgetting cess. The 12.5% rate is the tax before the 4% cess.
The section
The holding period is section 2(101). The usual 12.5% rate is section 197 (this was section 112). Listed equity is section 198 (this was section 112A). The older-house choice is section 197(3).
The capital gains calculator runs one sale. The capital gains guide and the gold tax guide use the same clock.
Questions
Is LTCG the same for shares and for gold?
No. Listed equity that paid securities transaction tax is section 198, and the first ₹1,25,000 of long-term gain in the year is left out. Gold and a house use section 197 at 12.5%, with no ₹1,25,000 exemption.
Does the ₹12 lakh rebate cancel LTCG?
No. Section 156 can wipe slab tax. It does not wipe tax under section 197 or section 198. A salary inside the rebate can still leave a bill on a share sale or a gold sale.
When does a holding become long-term?
Section 2(101) uses 12 months for listed equity and an equity fund, and 24 months for most other assets, including physical gold and property. A sale on the anniversary is still short-term.
Sources
Figures checked 28 Oct 2026.