Long-Term Capital Gains Tax Calculator (Equity)
What Is This Tool?
Long-term capital gains from stocks held for more than 12 months are taxed at a flat 20% rate with indexation benefit in India. This preferential rate encourages long-term investing. Our LTCG calculator helps you instantly calculate your tax on stock investments held long-term and see how indexation reduces your gain.
Why This Can Be Confusing
Many investors confuse LTCG and STCG rates. LTCG is taxed at a flat 20% while STCG uses your slab rates (much higher). Additionally, indexation benefit adjusts your cost price for inflation, reducing taxable gain significantly. This calculation confuses many investors.
How This Tool Works
This calculator takes your LTCG and applies the flat 20% rate plus calculates the indexation benefit. Indexation adjusts your cost price upward for inflation using Cost Inflation Index, significantly reducing your taxable gain. You see the benefit of long-term holding in lower tax bills.
Step-by-Step: How to Use This Tool
- 1.Enter your residency status
- 2.Input the capital gain from stocks held more than 12 months
- 3.The calculator applies 20% flat LTCG rate
- 4.Indexation benefit is calculated and applied to reduce gain
- 5.See your final tax liability and savings vs short-term gains
Real-Life Situations Where This Tool Helps
- ✓Long-term investors selling blue-chip stocks after holding for years
- ✓Retirees liquidating equity portfolios held for 10+ years
- ✓Wealth creators taking long-term capital gains from equity SIPs
- ✓Business owners with personal stock investments
- ✓NRIs selling Indian stocks held for more than a year
Common Mistakes
- ⚠Not claiming indexation benefit which significantly reduces LTCG amount
- ⚠Confusing 12 months holding period calculation—it's 12 months from purchase to sale date
- ⚠Not using Cost Inflation Index correctly to compute indexed cost price
- ⚠Assuming all gains are taxed at 20% without understanding indexation benefit
- ⚠Forgetting that indexation benefit is calculated separately for each holding
Benefits
This calculator shows exactly how indexation benefit reduces your LTCG tax. You instantly see the significant tax savings from long-term holding compared to short-term gains. This helps you understand why patient investing is rewarded with lower taxes, encouraging wealth creation through stock market investments.
Frequently Asked Questions
What is the LTCG tax rate on stocks?+
Long-term capital gains from stocks are taxed at a flat 20% rate (with indexation benefit). This is much lower than STCG which uses your slab rate (up to 30%+). The 20% rate applies to all residents and NRIs.
What is indexation benefit?+
Indexation adjusts your cost price upward for inflation using Cost Inflation Index (CII). If you bought stocks at ₹100 in 2010 and sold at ₹500 in 2024, without indexation gain is ₹400. With indexation, cost adjusts to maybe ₹250, so gain becomes ₹250 only. You pay 20% on ₹250 instead of ₹400.
How do I calculate LTCG with indexation?+
LTCG = (Selling Price - Indexed Cost Price) × 20%. Indexed Cost Price = Cost Price × (Current Year CII / Year of Purchase CII). Your tax calculator or broker usually provides CII values. The result is significantly lower tax than without indexation.
Is LTCG better than STCG?+
LTCG is significantly better. Example: ₹10 lakh gain. STCG at 30% slab = ₹3 lakh tax. LTCG at 20% with indexation = maybe ₹1-1.5 lakh tax. Long-term holding saves ₹1.5+ lakh on the same gain.
Do NRIs get LTCG benefit?+
Yes, NRIs also get the 20% flat LTCG rate with indexation benefit on Indian stock gains. This makes holding Indian stocks attractive for NRIs from a tax perspective.
Can I claim loss on LTCG?+
Yes, LTCG losses can be offset against LTCG gains in the same year. Excess LTCG loss can be carried forward for 8 years to offset future LTCG gains.