Lesson 6 of 6 · Tax-free gains every year · 4 min read · Reviewed 15 Oct 2026
Each financial year, the first ₹1.25 lakh of long-term gains on listed shares and equity funds is tax-free. Above that, tax is 12.5% plus cess. Selling and buying back enough to book ₹1.25 lakh of gains each year uses the exemption and raises your purchase price for later.
When you sell shares or equity mutual funds held for more than a year, the profit is a long-term capital gain (LTCG).
Each financial year the first ₹1.25 lakh of these gains is tax-free. Above that you pay 12.5% plus cess. An unused exemption doesn’t carry forward.
You can sell and buy back enough each year to book ₹1.25 lakh of gains. You pay no tax on it, and your purchase price resets higher, which lowers tax when you finally sell.
Key idea: Rates as of Budget 2024. Check the latest Budget or ask your CA before acting.
Try the calculator and the one-question quiz on this page to check your own numbers.
Listed shares and equity mutual fund units held for more than 12 months.
No. Any part of the exemption you don’t use in a financial year is lost.
For shares, buy back on the next trading day; a same-day sell and buy is settled as an intraday trade. Mutual fund units can be bought back once the redemption is processed.
For learning only, not investment advice. Designed and built by people who have worked at India’s leading wealth management firms.