Finance Minister Nirmala Sitharaman's remarks on the debate around long-term capital gains (LTCG) tax and securities transaction tax (STT) have rekindled investor hopes of tax relief in the Union Budget 2027. While Sitharaman did not signal any definitive change, the markets cheered her comments on Tuesday, with the Sensex rallying over 1,100 points.
Against this backdrop, here is a look at the LTCG tax rules, rates and calculations, according to the Income Tax Department.
Capital gains tax is the tax payable on profits arising from the transfer of a capital asset. According to the Income Tax Department, these profits are generally taxed under the head 'Capital Gains', subject to applicable exemptions and conditions.
Capital assets broadly include property, securities and certain unit-linked insurance policies. However, the Income Tax Act excludes specified assets from this definition. These include personal effects such as clothes and furniture held for personal use, as well as agricultural land situated outside prescribed municipal limits, subject to specified conditions. Jewellery, archaeological collections, drawings, paintings, sculptures and works of art are not covered by the personal-effects exemption and may qualify as capital assets.
According to the Income Tax Department, the holding period depends on the asset: