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Can you claim the ₹1.25 lakh LTCG tax exemption on global stocks?

balwant jain
By Balwant Jain

3 min read | Updated on October 12, 2026, 09:04 IST

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SUMMARY

Can investors claim the ₹1.25 lakh long-term capital gains tax exemption on global stocks? Here's how the tax treatment differs for overseas shares and non-equity mutual funds.

Can you claim the ₹1.25 lakh LTCG tax exemption on global stocks?

The income tax laws provide for different mechanism for taxation of long term capital gains on listed equity shares/equity oriented schemes and other capital assets.

Investors often book long-term capital gains of up to ₹1.25 lakh in a financial year to take advantage of the tax exemption available on equity investments. But does this benefit also apply to global stocks held for more than two years? What about non-equity mutual funds that attract long-term capital gains tax at 12.5%? The answer depends on the type of investment and the tax provisions applicable to the gains.

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Today's Q&A explains such details in response to a query by a reader.

Question: I understand that upto ₹1.25 lakh long term gain on equity is not taxable. This gain can be booked by selling stocks and equity oriented mutual funds. Can this also be done by selling global stocks (2 year holding period) and mutual funds where taxation is 12.50% after 2 years)?
Answer: The income tax laws provide for different mechanism for taxation of long term capital gains on listed equity shares/equity oriented schemes and other capital assets.

As per Section 112A of the Income Tax Act, 1961 which is replaced by Section 198 of Income Tax Act, 2025 aggregate of long term capital gains from listed shares and equity oriented schemes on which Securities Transaction Tax has been paid are taxed at zero rate upto ₹1.25 lakh beyond which the long term capital gains are taxed at 12.50%.

Section 112 of Income Tax Act, 1961(Section 197 of Income Tax Act, 2025) provides for taxation of long term capital gains on all capital assets other than listed shares and equity oriented schemes and including global stocks and mutual fund schemes which do not have more than 65% investments in equity or debt. This section provides for flat rate of tax @ 12.50% for long term capital gains without there being any separate limit for long term capital gains which are to be taxed at zero rate or lower rate.
So the benefit of zero rate of tax for long term capital gains is available only for listed shares and equity oriented schemes which have more than 65% of investment in equity and on which STT has been paid and not for long term capital gains arising on other securities or capital assets.
Have a personal finance, mutual fund, or income tax query? We will try to get them answered by experts. Write to sangeeta.ojha@rksv.in
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Disclaimer: The views and opinions expressed above are those of respective experts/commentators and do not reflect the views of Upstox. The above Q&A is only for informational purposes and should not be considered investment or tax advice from Upstox. Please consult a tax expert for your complex tax problems.

About The Author

balwant jain
Balwant Jain is a Mumbai-based tax and investment expert.

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