New Capital Gains Rules (July 2024)
The Union Budget 2024 significantly changed how equity is taxed in India:
- STCG (Short Term): Increased from 15% to 20% for equity sold within 12 months.
- LTCG (Long Term): Increased from 10% to 12.5% for equity sold after 12 months.
- LTCG Exemption: The tax-free limit for LTCG was increased from ₹1,00,000 to ₹1,25,000 per financial year.
Tax Harvesting Strategy: If you are holding Long Term equity, you should "harvest" your ₹1.25 Lakh tax-free limit every single year. Sell exactly enough shares to book ₹1.25L in profit, and immediately buy them back. You pay zero tax and artificially raise your buy price (grandfathering), saving you 12.5% tax in the future.