How to Save Tax on Long-term Capital Gains?

Long-term capital gains (LTCG) are the profits from the sale of assets held for more than a specified period. This period is generally 36 months for most assets. To minimize your LTCG tax liability, here are some common strategies:

Exemption Under Section 54B/54D/54EC:

• Section 54B and 54D: These sections allow you to reinvest your LTCG from the sale of residential property into a new residential property within a specified period. The exemption is capped at the cost of the new property.
• Section 54EC: If you don't want to invest in a new property, you can invest your LTCG in specified government bonds issued by agencies like NHAI, RECL, etc. This exemption is capped at Rs. 50 lakhs.

Capital Gains Account Scheme (CGAS):

You can defer your LTCG tax liability by investing the gains in CGAS-approved bonds within six months of selling the asset. A minimum investment of Rs. 25 lakhs is required, and the invested amount is subject to a lock-in period of three years.

Set Off Against Short-Term Capital Losses:

If you have short-term capital losses, you can set off them against your long-term capital gains to reduce your taxable income.

Utilize Tax-Saving Investments:

Consider investing in tax-saving instruments like Equity Linked Savings Schemes (ELSS) to reduce your overall taxable income.

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