Union Budget 2026: LTCG Tax Unchanged at 12.5%, STT on Commodity Futures Hiked

The Union Budget presented on February 1, 2026, confirms that long term capital gains (LTCG) tax rates will remain at 12.5% for the upcoming financial year and introduces a higher securities transaction tax on commodities futures. 

LTCG Tax Rates Remain at 12.5% in Budget 2026 

The finance minister announced that the LTCG rates applicable in FY26 will continue unchanged into FY27. No amendment to income tax slabs was mentioned, so the prevailing structure stays in force for the next year. 

Definition of Long Term Capital Gains 

Capital assets such as listed equity shares, mutual funds, tax‑free bonds, debentures, unlisted shares, immovable property and other instruments generate capital gains when sold.  

The holding period determines whether the gain is classified as long term or short term, and the period varies across asset classes. 

Read More: Capital Gains Tax Framework Ahead of Union Budget 2026! 

Current LTCG Rates by Asset Class 

Unit linked insurance plans with an annual premium above ₹2,50,000 are taxed at 12.5% without indexation.  

Listed equity shares and equity‑focused mutual funds attract 12.5% after 12 months, with an exemption of ₹1,25,000 per individual.  

Listed tax‑free bonds and listed debentures also fall under the 12.5% rate after 12 months. 

Unlisted shares are taxed at 12.5% after 24 months, while unlisted debentures and bonds are taxed at the applicable slab rate after 24 months. 

Buyback Proceeds Treated as Capital Gains 

The budget states that buyback proceeds received by any category of shareholder will be taxed as capital gains, aligning them with the existing LTCG framework. 

Increase in STT on Commodities Futures 

The securities transaction tax on commodities futures is proposed to rise from 0.02% to 0.05%. This change was noted to have caused a sharp decline in the Sensex and Nifty indices on the announcement day. 

Conclusion 

Union Budget 2026 maintains the 12.5% LTCG rate across most asset classes, classifies buyback proceeds as capital gains, and raises the STT on commodities futures to 0.05%. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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