What is LTCG and STCG ?

 

LTCG and STCG in Budget 2024

LTCG :- Long-Term Capital Gain
STCG:- Short-Term Capital Gain

KEY TAKEAWAY'S

• Selling a capital asset after owning it for one year or less results in a short-term capital gain.
  
  
• Selling a capital asset after owning it for more than one year results in a long-term capital gain.
  
  
• Capital assets include stocks, bonds, precious metals, jewelry, art, and real estate.
  
  
  
  

Understanding Long-Term and Short-Term Capital Gains   

                                 Capital assets include stocks, bonds, precious metals, jewelry, and real estate. The tax that you’ll pay on the capital gain depends on how long you held the asset before selling it. Capital gains are classified as either long- or short-term and are taxed accordingly.

Finance Minister Nirmala Sitharaman, in her presentation of the Union Budget for FY 2024-25 announced several key tax changes impacting capital gains and trading activities:

Long-Term Capital Gains: The tax rate on long-term capital gains for all financial and non-financial assets will rise from 10% to 12.5%. Additionally, the exemption limit for these gains has been set at ₹1.25 lakh per year.

Short-Term Capital Gains: The tax rate on short-term gains from certain financial assets will increase from 15% to 20%.

Among other announcements that impact the markets, the FM also declared a significant hike in the STT rate was announced, rising from 0.01% to 0.02%. This increase will effectively double the tax burden for equity and index traders involved in Futures and Options (F&O) transactions.