Budget 2026: FM Sitharaman keeps LTCG tax rates unchanged for FY27

The Union Budget 2026 keeps long-term capital gains tax rates unchanged, while buyback proceeds will be taxed as capital gains; securities transaction tax on commodities futures has been increased

Union Budget 2026 saw no changes to long-term capital gains (LTCG) tax rates and made no mention of revisions to income tax rates either. As a result, the prevailing rates for the financial year 2025–26 (FY26) are expected to continue in the new financial year too.

What are long-term capital gains?

Capital assets include listed equity shares, mutual funds, tax-free bonds, debentures, unlisted shares, immovable property and other financial instruments. The tax treatment of capital gains depends on the holding period, which determines whether gains are classified as long-term capital gains (LTCG) or short-term capital gains (STCG). The holding period differs between asset classes such as listed equity shares and equity-focused mutual funds versus immovable assets, gold, unlisted equity shares or debt mutual funds. 

 

 

What are the prevailing LTCG tax rates?

• Unit-linked insurance plans (Ulips) with an annual premium above ₹2.5 lakh: LTCG taxed at 12.5 per cent without indexation
• Listed equity shares and equity mutual funds: LTCG taxed at 12.5 per cent without indexation after 12 months; gains up to ₹1.25 lakh exempt
• Listed tax-free bonds and listed debentures: LTCG taxed at 12.5 per cent without indexation after 12 months
• Unlisted shares: LTCG taxed at 12.5 per cent without indexation after 24 months
• Unlisted debentures and bonds: LTCG taxed at slab rate (no indexation) after 24 months

Meanwhile, Finance Minister Nirmala Sitharaman said buyback proceeds for all categories of shareholders will be taxed as capital gains. She also proposed increasing the securities transaction tax (STT) on commodities futures to 0.05 per cent from 0.02 per cent, which triggered a sharp fall in the Sensex and Nifty indices.