The Union Budget 2024 has increased the long-term capital gains tax (LTCG) on both financial and non-financial assets from 10% to 12.5%. Additionally, the short-term capital gains tax (STCG) on certain assets has been raised to 20%.


However, the exemption limit for long-term capital gains tax has been increased from Rs 1 lakh to Rs 1.25 lakh. This adjustment means you could potentially save on capital gains taxes despite the LTCG rate hike.

For example, under the previous provisions, long-term capital gains up to Rs 1 lakh were exempt, and the tax on a gain of Rs 2 lakh was Rs 10,400 (including a 4% cess, excluding surcharge). With the new amendment, the exemption limit is now Rs 1.25 lakh, reducing the tax on a Rs 2 lakh gain to Rs 9,375 (including a 4% cess, excluding surcharge). This results in a net savings of Rs 650 for taxpayers, as explained by Divya Baweja, Partner at Deloitte India.

The actual impact on your taxes will depend on the amount of your capital gains, but you may see some savings due to the higher exemption limit despite the increased LTCG rate