Budget 2026: Taxpayers May Get Major Relief in LTCG, Sitharaman to Simplify Rules

• LTCG tax on listed shares and equity mutual funds was reintroduced in 2018 at 10% on gains exceeding Rs 1 lakh.
• Union Budget 2024 increased LTCG tax on listed shares/equity MFs to 12.5% and reduced it for unlisted shares/immovable property to 12.5%, while abolishing indexation benefit.
• Indexation benefit for properties acquired before July 23, 2024, was retained, offering a 20% tax with indexation or 12.5% without.
• Disparity in holding periods for different assets (12 months for listed shares, 24 months for unlisted) and the need to remove STT are key issues.
• Tax rules for debt funds are less favorable than equity funds, with debt funds taxed at slab rates and no LTCG benefit, creating disparity.

Why It Matters: Budget 2026 may simplify capital gains tax, offer LTCG relief, and address disparities in tax rules.