What Is the LTCG Tax Rate on Equity Shares and Equity Mutual Funds?
For qualifying long-term capital gains covered by section 112A, the current AY 2026–27 framework uses a 12.5% rate on the portion above the applicable annual threshold, subject to the conditions of the provision.
Quick Answer
Qualifying section 112A long-term capital gains are currently taxed at 12.5% above the ₹1.25 lakh annual threshold, subject to the applicable conditions. The threshold is not a blanket exemption for every type of capital gain.
What Is Section 112A?
Section 112A applies to specified long-term capital gains from qualifying equity shares, units of equity-oriented funds and units of business trusts, subject to the conditions in the law.
Current 12.5% Rate
The AY 2026–27 ITR framework identifies long-term capital gains under section 112A among the categories chargeable at 12.5%.
What Is the ₹1.25 Lakh Threshold?
The current return eligibility guidance permits certain taxpayers to use ITR-1 or ITR-4 when section 112A long-term capital-gain income does not exceed ₹1.25 lakh, subject to all other eligibility conditions. The applicable section 112A threshold should be considered when calculating tax.
Does This Apply to Every Capital Gain?
No. Section 112A applies to specified assets and transactions meeting its conditions. Property, many other assets and non-qualifying transactions follow different provisions.
What About STT?
The application of section 112A involves statutory conditions concerning the securities transaction tax and the nature of the transaction. Verify the conditions for the specific transaction.
Important
Capital-gains rates depend on the asset, transaction date and applicable law. Do not apply the section 112A rate to all long-term gains.
Frequently Asked Questions
Is LTCG on equity shares 12.5% for the entire gain?
For qualifying section 112A gains, the applicable rate is 12.5% on the taxable portion after applying the relevant threshold and rules; it is not a blanket rate for every long-term gain.
Is the ₹1.25 lakh threshold available every year?
The current section 112A framework provides the relevant annual threshold. The amount and rules should be checked for the assessment year being filed.
Does section 112A apply to property?
No. Section 112A concerns specified equity shares, equity-oriented fund units and business-trust units meeting the statutory conditions.
Related EZTax Resources
- What Is AIS (Annual Information Statement) in Income Tax?
- AIS vs Form 26AS: What Is the Difference?
- Does AIS Show Capital Gains?
- AIS Reconciliation and AI-Powered Income Tax Filing with EZTax
- Capital Gains Income Tax Guide
Official Sources
For current capital-gains and ITR guidance, refer to the Income Tax Department resources for the relevant assessment year.
