This is a very pertinent question you are asking especially given that the Union Budget is right around the corner. Before we understand long-term capital gains tax, let’s first understand what capital gains is. Capital gains is the profit made by an individual or HUF on any capital asset. The tax levied on the gains made is called capital gains tax. There are two types of capital gains: 1. Short-term capital gains – If a tax payer holds shares and securities for a period of not more than 36 months preceding the date of its transfer/sale, then it will be treated as short-term capital asset. 2. Long-term capital gains - If a tax payer holds shares and securities for a period more than 12 months before the date of its transfer/sale, then it will be treated as long-term capital asset. There was no tax on LTCG until 2018, but Finance Minister Arun Jaitley reintroduced it on stocks. Thus, now investors have to pay 10% tax on a LTCG above Rs 1 lakh in a financial year. What this means is that if an investor made long-term gains of Rs. 1,50,000 in a year, LTCG tax is applicable only for Rs. 50,000 (Rs 150,000-100,000).