How much ltcg is tax free in India?

Wondering about the LTCG tax free limit? In India, the tax treatment of long-term capital gains (LTCG) varies based on the type of asset and the applicable exemptions under the Income Tax Act. Scroll down to learn more.

What is the LTCG Limit for Tax Free?

As of the current tax laws, the following are the key provisions related to the tax-free threshold for LTCG:

• For equity shares and equity-oriented mutual funds, LTCG is defined as gains arising from the sale of these assets held for more than one year.

• The first ₹1.25 lakh of LTCG is exempt from tax each financial year, meaning that any gains below this threshold are tax-free.

• For other capital assets, such as real estate, gold, or debt-oriented mutual funds, LTCG applies if the assets are held for more than two years (real estate) or three years (other assets). These gains are generally taxed at 20% after allowing for indexation benefits, which adjust the purchase price for inflation.

• There is no specific tax-free threshold for LTCG on non-equity assets; however, the taxpayer can claim exemptions under certain sections like Section 54, Section 54EC, and Section 54F if the gains are reinvested in specified assets.

• Taxpayers can benefit from various exemptions if the capital gains are reinvested in specified assets. For example, under Section 54, one can reinvest gains from the sale of a residential property into another residential property.

• Under Section 54EC, gains from any asset can be reinvested in specified bonds, up to ₹50 lakhs, within six months from the sale date to avail of tax exemption.

It's essential for taxpayers to stay updated with current tax laws, as these thresholds and rates can change with new budget announcements. 

This is all about tax free limit for LTCG.

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The tax levied on long term capital gains is known as the Long-term Capital Gain Tax. When you dispose of assets by holding them for more than three years, a long term capital gain tax is imposed. I invested in mutual funds a few years back and asked my friend about the ltcg tax free limit. He shared some interesting details with me which I will list below.

How much ltcg is tax free in India?

• If your LTCG income is less than 250k per annum with no other income you don't need to worry about LTCG tax. 

• You will get tax exemption if the gains you receive are from the sales of property.  

• If you have other incomes besides LTCG you can invest in NHAI REC NABARD PFC IRFC bonds, during 6 months of sale or you need to purchase immovable property during 2 years of getting LTCG.

• For bonds, you are required to invest all the proceeds of the sale. For immovable property, you are required to invest the LTCG you have earned for the payment of the tax.

• You also need to open an account for capital gains in any Nationalized bank and keep your LTCG proceeds there.

These are some pointers you need to remember for ltcg tax free limit.