What is LTCG tax?

Filing taxes and keeping accounts of all your investments and assets is extremely important. It helps you in keeping a track of your financial status and of course, prevents you from committing mistakes while filing taxes. I have been doing it for a few years now and when I was just starting out, I came across a plethora of terms which bowled me over. One of them being LTCG. I wondered what is LTCG Tax. A good friend of mine who was preparing for his final CA exams helped me understand it better. So let me take you through it.

LTCG Tax or long term capital gains tax is a tax levied on the long term capital gains of an individual. Long term capital gains are generated via property sale, agricultural land sale, mutual funds investment, stocks and bonds.

The computation of LTCG tax is based on the fact that an individual held on to the capital assets for more than 3 years in case of sale of property/ land, while 1 year or more in case of shares, stocks, etc.

Finally let me tell you about what is LTCG tax rate. LTCG rate is fixed at 10% over and above Rs. 1 lakh in case of sale of equity-oriented funds. Whereas, in case of property sale the LTCG tax rate is 20%.

This is all I have learned about what is LTCG so far. I hope you learned something too.