Question 1

What is the difference between Long-Term and Short-Term?

Accepted Answer

For equity, holding over 1 year is Long-Term (LTCG). For real estate, it is 2 years. Short-Term gains are generally taxed at higher rates.

Question 2

Is there a tax exemption limit for equity LTCG?

Accepted Answer

Yes, in India, Long-Term Capital Gains on listed equities and equity mutual funds are tax-free up to ₹1 Lakh per financial year.

Question 3

Can I offset capital losses?

Accepted Answer

Yes, short-term capital losses can be set off against both short-term and long-term gains. However, long-term capital losses can ONLY be set off against long-term gains.

Question 4

What is indexation benefit?

Accepted Answer

Indexation adjusts the purchase price of your asset for inflation over the holding period, significantly reducing your taxable long-term capital gains on real estate or debt funds.

Question 5

How can I save tax on long-term capital gains?

Accepted Answer

You can save LTCG tax on real estate by reinvesting the gains into another residential property under Section 54, or by investing in specified bonds under Section 54EC.

Capital Gains Tax

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