₹1.25 lakh equity LTCG tax-free every year — Section 198 (old 112A)

The exemption

The first ₹1,25,000 of long-term equity gains each year is exempt (holding > 12 months); the balance is taxed at 12.5% without indexation.

Harvest it every year

Sell and re-buy to realise up to ₹1.25 lakh of gains tax-free annually — the limit resets each year, quietly stepping up your cost base and saving real tax over time.

Short-term equity gains (≤ 12 months) are taxed at 20% — Section 196 (old 111A).

Who it helps

Every equity/mutual-fund investor — use the annual exemption and consider tax-loss harvesting alongside.

Harvesting it right

• Each financial year, sell enough long-held equity/MF units to book up to ₹1.25 lakh of gains and immediately re-buy.
• This resets (steps up) your cost base tax-free, so future gains are smaller.
• Mind the small trading costs and the 12-month holding requirement.