Long-term Capital Gains on shares is the profit incurred by the investor after selling an asset at an appreciated value (higher than the cost price). The assets include: stocks, jewellery, shares, securities, vehicles, etc. since as an investor earns profit from the sales, he is liable to pay tax on LTCG (Long-term capital gains) on shares.

There are two types of capital gains:

  • Short-term Capital Gain Taxes
  • Long-term Capital Gain Taxes

Tax on LTCG on shares is imposed on assets which are held by the owner for more than 3 years. While in the case of short-term capital gains, taxes are imposed when the investor holds the asset for just 3 years such as mutual funds, bonds and shares.

Paying taxes on capital gains can be a strenuous job, however it can be prevented under certain IT acts conferred by the law of the land.Protect yourself from the law and lessen the burden of taxes by engaging tax audit company. This article decodes the first-hand remedy to get relaxation from tax on LTCG on shares.

Ways to Exempt Tax on Long-term capital gains on Shares

There are several provisions under the Indian IT Act that allows:

  • Super senior citizens above 80 years to get an exemption below the threshold amount of 500,000.
  • The early senior citizens who fall under the age category of 60-80 years old can enjoy exemption up to 300,000 every year.
  • People below 60 years can avail for exemption of taxes for up to Rs 250,000 every year.
  • Hindu Undivided families with an annual income of Rs 250,000 can get exemption on capital gains.
  • NRIs with an income of Rs 2,50,000.

The four ways to save tax on LTCG on shares are as follows:

1.    Section 54

The capital gains applied on sale of property and reinvestment of the funds to acquire another house or property needs to be constructed within 3 years after the sale.

Exceptions offered under Section 54

  • You can claim for exemption only when you intend to invest in only one property.
  • You can apply for an exemption if you are buying a property in the Indian land.
  • Once purchased, you cannot sell the property for up to 3 years after the purchase. If the property is under-construction then you can list it for sale only if the possession and construction are done. 

2.    Section 54 EC

The Section 54 EC implies selling a property or a house as a long-term capital gain and then using it to purchase bonds and shares.

Exceptions offered under Section 54 EC

  • You can revoke the tax on LTCG on shares when you invest in identified securities and bonds.
  • You cannot sell the incurred bonds before 3 years of the maturity period to get exempted from paying taxes.
  • Moreover, if you have sought a loan against the bonds and securities within three years then you cannot apply for exemption.

3.    Section 54F

This act is designed for the long-term capital gain that is incurred by selling the capital asset (excluding house)and investing the same amount to buy another property.

Exceptions under Section 54F

The relaxations offered by Section 54F are in absolute conjunction with Section 54.

4.    Choosing a Capital Gains Account Scheme (CAGS)

The requisite to uphold assets and save tax is to reinvest. By depositing the money into the CAGS account, you can stretch your time slot and reinvest in the property of your choice.

Exemptions offered under the Capital Gain account scheme(CAGS)

  • You can open a capital gain account in a nearest public sector bank and keep it active for 2 years. However, if your chosen property is WIP, then you may keep your money for an extension of 3 years.
  • You should create a CAGS account before the due date of filing income tax returns. The money should only be used to buy a residential plot.


By following the set of rules conferred by the IT acts, you can easily enjoy tax exemption on capital gains and grow your money like never before. Click https://www.tickertape.in/blog/long-term-capital-gain-on-share/ to know more. You can also consult a financial advisor, in case of inadvertencies or dubiousness.