What are Long-Term Capital Gains (LTCG)?

Long-Term Capital Gains (LTCG) refer to the profits made from the sale or transfer of specific assets held for a certain period, typically longer than one year.

How were LTCGs taxed before the Union Budget 2024?

Before the Union Budget 2024, LTCGs were taxed at a rate of 20% with an indexation benefit, which adjusted the purchase price of assets for inflation, reducing the taxable gain.

What changes did the Union Budget 2024 introduce for LTCG?

The Union Budget 2024 introduced the option to pay a flat 12.5% tax rate without the indexation benefit, or to continue with the 20% tax rate with the indexation benefit for certain assets acquired before July 23, 2024.

How does the new tax option help taxpayers?

The new tax option allows taxpayers to choose the method that results in a lower tax liability, either by paying a flat 12.5% tax without indexation or 20% with indexation, providing flexibility and potentially reducing the tax burden.

Who can help with understanding these changes?

Taxpayers can visit their nearest Income Tax office, contact a Chartered Accountant, or call the official helpline numbers at 1800-103-0025 or 1800-419-0025 for assistance.

What is the long term capital gains tax for 2024 25?

For FY 2024–25, long term capital gains on listed equity remain taxed at 10% above ₹1 lakh, while LTCG on property and other assets is taxed at 20% with indexation if applicable.

What is the tax rate for Ltcg before and after 23 July 2024?

Before and after 23 July 2024, the LTCG tax rates remained the same, as Budget 2024 did not alter existing long-term capital gains tax structures.

What is the 2024 tax on long-term capital gains?

In 2024, long-term capital gains tax is 10% on listed equity above ₹1 lakh and 20% with indexation on most non-equity assets like property and gold.

What is the 36 month rule for capital gains tax?

The 36-month rule means that assets like property are treated as long-term capital assets if held for more than 36 months, making them eligible for LTCG tax rates.

What is the capital gains tax rate for Union Budget 2024?

Union Budget 2024 kept capital gains largely unchanged, with equity LTCG taxed at 10% above ₹1 lakh, and most other LTCG taxed at 20% with indexation benefits as per existing rules.

Who has to pay 42% tax in India?

The 42% tax applies to individuals with very high income under the highest income tax slab including surcharge and cess, not specifically to capital gains alone.

What is the maximum lifetime capital gains exemption in 2024?

There is no fixed lifetime cap on capital gains exemption, but exemptions under sections like 54 and 54F depend on reinvestment limits and specific conditions.

What are the long term capital gain changes in budget 2024?

Budget 2024 did not introduce major LTCG changes; equity LTCG exemption of ₹1 lakh and 10% tax rate continued, along with existing rules for other assets.

What is the Ltcg tax rate in Budget 2025?

As of now, the LTCG tax rate for Budget 2025 has not been officially announced, so existing capital gains tax rates continue to apply.

What is the 90% rule for capital gains exemption?

The 90% rule generally refers to reinvesting most of the capital gains amount in specified assets to claim exemptions under certain sections, subject to conditions.

What are the changes to capital gains for tax year 2024?

For tax year 2024, capital gains rules remained stable, with no new taxes introduced and existing exemptions, holding periods, and indexation benefits continuing.

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How Are Long-Term Capital Gains (LTCG) Taxed After The Union Budget 2024?

Komal Bajpai

Author

Updated: 11-02-2026 at 8:30 AM

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500K+ Users

Long-term capital gains (LTCG) refer to the profit earned from selling or transferring certain capital assets after holding them for a specified period. The Government of India defines what qualifies as long-term and short-term capital gains, and these rules are reviewed regularly through the Union Budget.

The Union Budget 2024 introduced significant changes to the taxation framework of LTCG, especially impacting real estate owners and investors in unlisted assets. These changes have reshaped the long-term capital gains tax in India, making it essential for taxpayers to understand the new structure and plan their transactions accordingly.

This article explains how is LTCG is taxed after the budget 2024, the capital gains tax changes 2024, the reintroduced choice between indexation and flat tax, and how the LTCG tax calculation after the budget 2024 works in practice.

Overview

The table below highlights the key insights of the Long-term capital gains under budget 2025:

Parameter	Details
Topic	Long-Term Capital Gains (LTCG) Taxation
Governing Authority	Government of India
Applicable Law	Income Tax Act, 1961 (as amended by Finance Act 2024)
Major Update Year	Union Budget 2024
Previous LTCG Tax Rule	20% tax rate with indexation benefit
New LTCG Tax Options	12.5% without indexation or 20% with indexation
Applicability of Choice	Assets acquired before 23 July 2024
Assets Covered	Real estate and unlisted equity shares
Indexation Basis	Cost Inflation Index (CII) notified by CBDT
Purpose of Change	Reduce tax burden and offer flexibility to taxpayers
Impacted Taxpayers	Property owners, long-term investors, middle-class families
Exemptions Available	Yes (under Sections 54, 54EC, etc.)
Effective From	Assessment Year 2025–26
Relevance	Tax planning, property sales, long-term investments

How Were Long-Term Capital Gains Treated Before The Union Budget 2024?

Before the Union Budget 2024 LTCG tax announcement, long-term capital gains on assets such as real estate and unlisted equity were taxed at 20% with indexation benefits.

Indexation allowed taxpayers to adjust the purchase price of an asset for inflation using the Cost Inflation Index (CII), notified annually by the Central Board of Direct Taxes (CBDT). This adjustment reduced the taxable gain and, consequently, the tax payable.

For example, if a taxpayer sold a property after holding it for more than two years, the profit qualified as LTCG. The indexed purchase cost was deducted from the sale value, and the remaining gain was taxed at 20%.

This system was considered taxpayer-friendly, particularly for middle-class homeowners, as inflation-adjusted costs significantly lowered tax liability under the long-term capital gains tax in India.

What Are The Changes In LTCG Treatment Under The Finance Act 2024?

The Union Budget 2024 initially proposed a major shift in LTCG taxation by:

Removing indexation benefits entirely.
Introducing a flat LTCG tax rate of 12.5%.

This proposal aimed to simplify how LTCG is taxed after the budget 2024, but it triggered widespread concern among taxpayers, especially real estate investors. Without indexation, taxable gains would increase sharply for long-held assets, resulting in higher tax outgo despite the lower rate.

As a result, the proposed LTCG tax rate for 2024 sparked debate across the financial and real estate sectors.

Finance Act 2024 Amendment: Indexation Benefit Reintroduced

Responding to public feedback, the government introduced an amendment through the Finance Act 2024, restoring flexibility in LTCG taxation.

Under the revised new LTCG rules after budget 2024, eligible taxpayers now have two taxation options:

12.5% LTCG tax without indexation, or
20% LTCG tax with indexation benefits.

Taxpayers can calculate their liability under both methods and choose the one that results in a lower tax burden.

However, this option applies only to properties and unlisted equity assets acquired before 23 July 2024, the date on which the Union Budget 2024 was presented.

This amendment brought balance to the LTCG tax after the Union Budget 2024, allowing flexibility while maintaining tax reform objectives.

Why This Change Matters For Taxpayers?

The revised approach under the capital gains tax changes 2024 is particularly beneficial for:

Long-term property holders.
Middle-class families are selling inherited or self-occupied homes.
Investors who purchased assets during high-inflation periods.

By allowing a choice between indexation and a lower tax rate, the government has reduced the risk of sudden tax shocks. This move also encourages transparency and better tax planning under the Union Budget 2024 LTCG tax regime.

How Is Indexation Benefit Calculated?

The indexation benefit is calculated using the CII figures released by the CBDT each year. The formula to calculate the indexed cost of acquisition is as follows:

Indexed Cost of Acquisition (ICoA) = Original Cost of Acquisition x (CII of Year of Sale / CII Year of Purchase)

Example Of LTCG Tax Calculation With Indexation

If a person bought a house for ₹20,00,000 in FY 2021-22 and sold it in FY 2024-25 for ₹40,00,000, the calculation would be:

CII for 2021-22: 317
CII for 2024-25: 363
Indexed Cost: ₹20,00,000 times (363 \div 317) = ₹22,90,221$
Taxable Amount (with indexation): $₹40,00,000 - ₹22,90,221 = ₹17,09,779$
Tax at 20%: ₹3,41,956

Compare this with the 12.5% flat rate (without indexation):

Taxable Amount: $₹40,00,000 - ₹20,00,000 = ₹20,00,000$
Tax at 12.5%: ₹2,50,000

In this specific scenario, the 12.5% flat rate is more beneficial.

This adjusted amount is then taxed at 20%, demonstrating how LTCG tax calculation after budget can significantly reduce tax liability when indexation is applied.

LTCG Tax Without Indexation: When Is It Better?

Under the new LTCG rules after the budget 2024, taxpayers may choose the 12.5% flat tax rate without indexation if:

The asset was held for a shorter long-term period.
Inflation during the holding period was low.
The difference between indexed and non-indexed costs is minimal.

In such cases, paying a lower rate may result in less tax than the indexed method.

This dual-option structure makes how LTCG is taxed after the budget 2024 more flexible than earlier proposals.

Impact Of LTCG Changes On Real Estate And Investment Behaviour

The revised LTCG tax rate 2024 structure is expected to:

Encourage real estate transactions.
Reduce hesitation among sellers due to tax uncertainty.
Improve liquidity in the housing market.
Support long-term investment planning.

By addressing concerns related to inflation and affordability, the LTCG tax after the Union Budget 2024 supports both fiscal discipline and taxpayer confidence.

What About The LTCG Exemption Limit In 2024?

While the tax rate structure has changed, the LTCG exemption limit 2024 continues to depend on specific provisions under the Income Tax Act, such as:

Section 54 (reinvestment in residential property).
Section 54EC (investment in specified bonds).

Taxpayers can still reduce or eliminate LTCG liability by reinvesting gains within the prescribed timelines. These exemptions remain a crucial part of the long-term capital gains tax in India.

Who Should Carefully Review These LTCG Changes?

You should review the capital gains tax changes 2024 carefully if you:

Plan to sell the property acquired before July 2024.
Hold unlisted shares or private equity investments.
Intend to reinvest LTCG proceeds for tax exemptions.
Want to optimise tax liability under the Union Budget 2024 LTCG tax.

Consulting a Chartered Accountant is advisable for an accurate comparison between the two tax options.

Conclusion

The Finance Act 2024 has reshaped the taxation of long-term capital gains by introducing flexibility rather than rigidity. The option to choose between 12.5% without indexation and 20% with indexation marks a balanced approach under the new LTCG rules after the budget 2024.

For taxpayers concerned about inflation and rising property prices, the return of indexation provides much-needed relief. At the same time, the simplified flat rate benefits those with shorter holding periods.

Understanding how LTCG is taxed after the budget 2024, planning transactions wisely, and using available exemptions can significantly reduce tax liability. Staying informed about the LTCG tax after the Union Budget 2024 is now essential for every property owner and long-term investor.

For personalised guidance, contact a qualified tax professional or reach out to the Income Tax Department helpline at 1800-103-0025 or 1800-419-0025.

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