Budget 2026: Lower LTCG Tax to 10%, ₹2 Lakh Exemption Could Boost Investor Savings

• Investors are demanding a reduction in Long Term Capital Gain (LTCG) tax to 10% and an increase in the tax-free exemption limit to ₹2 lakh in Budget 2026.
• In Union Budget 2024, LTCG tax on listed equity and equity-based mutual funds was raised from 10% to 12.5%, with the exemption limit increasing from ₹1 lakh to ₹1.25 lakh.
• If the proposed changes are implemented, a small investor with ₹1.5 lakh gain could save ₹3,125, a mediocre investor with ₹3 lakh gain could save ₹11,875, and a large investor with ₹10 lakh gain could save ₹29,375.
• The benefit comes from two parts: an increased tax-free exemption of ₹75,000 and a reduced tax rate from 12.5% to 10% on the remaining taxable amount.
• These changes could significantly improve post-tax returns for investors and encourage greater long-term investment in the stock market and equity funds.

Why It Matters: Proposed LTCG tax changes in Budget 2026 could lead to substantial savings and encourage equity investments.