Capital gains can significantly contribute to overall earnings and capital growth and, quite naturally, can be subjected to tax deductions. The profit gained from any asset sale is referred to as capital gain, and it can be either short-term or long-term, based on the holding period. The holding periods and long term capital gain taxation rates for each financial year are announced at the beginning of the year. As far as  2025 is concerned, it came with some interesting developments.

In this article, we shall explore long term capital gain taxation for 2025, compare significant changes against the rates of recent years, and take a look at predictions on what is to come!

Long-Term Capital Gains Tax 2025: Predictions

The days leading to the Union Budget announcement are always filled with anticipation. Industry experts have contrasting views, reflecting on divided expectations. Before

Some predicted a raise in the tax on LTCG exemption limit, which would allow investors to save on taxes. Others forecasted no significant changes in LTCG taxation in the upcoming budget, mainly due to the noticeable increases in LTCG tax and STT in the last budget. This forecast, if turned true, could potentially be beneficial for investors. Industry experts also mentioned how any increase in existing rates could impact the market and retail investors adversely.

Long-Term Capital Gains Tax 2025: Announced Rates

Check out the long term capital gain taxation rates for 2025:

Analysing and Comparing Long-Term Capital Gains Tax: 2025 vs. 2024 vs. Before

The budget of 2024 presented significant changes in the taxation. The tax on LTCG in equities was raised from 10% to 12.5% flat without indexation. In an attempt to balance the raise, the tax-free exemption limit in case of equity was raised to ₹ 1.25 lakhs under a financial year in place from ₹1 lakh.

A significant shift occurred in long term capital gain taxation for non-equity and unlisted assets. The long-term holding period was reduced from 36 months to 24 months, eliminating the previous 36-month classification. For these assets, the LTCG tax was revised to a flat 12.5% without indexation, while the STCG tax was lowered to 20%. In total, non-equity assets received lower LTCG rates and shorter holding periods for long-term classification, but they also lost indexation benefits.

Key highlights of the budget include:

• Only 2 holding period classifications to determine long-term capital gains were kept – 1 year and 2 years.
• The 1-year classification applied to all listed assets, including equities, REITs, bonds, and even index ETFs and gold ETFs. The criteria of 2 years applied for all remaining assets.
• A long term capital gain taxation rate of 12.5% was standardised.
• The 12.5% rate was higher than the previous 10% for equities. However, it is lower than the 20% (with indexation) applied to non-equity assets. The indexation benefits were noticeable. Whether the holding period is 2 years or 20 years, the taxation rate remained the same at 12.5% without any indexation benefit.

The long term capital gain taxation announced for 2025 didn’t bring much change from the previous year, 2024, other than the elimination of indexation benefit.

Wrapping Up!

The Union Budget of 2025 had many surprises in stores, with multiple changes. While the changes brought to the income tax slabs caught much attention, investors also had their eyes fixed on long term capital gain taxation. With the rates announced and remaining similar to last year, it may offer a sense of stability for some investors. Get familiar with the holding periods for long-term and short-term classifications if you haven’t yet. Plan your investment and financial strategies accordingly. There are many tax-saving strategies, but considering the not easily or completely predictable changes in taxation, portfolio diversification can play a major role in helping you keep the annual LTCG within the exemption limit and save on taxes.