Grandfathering rule for LTCG

Mon, 11 May 2026 00:00:00 +0000

The grandfathering rule for long-term capital gains (LTCG) is a transitional provision in Section 112A of the Income Tax Act 1961 that protects equity investors from being taxed on gains that accrued before 1 February 2018. Under the rule, the cost of acquisition for computing LTCG on listed equity shares and equity-oriented mutual funds acquired before 31 January 2018 is deemed to be the higher of the actual purchase price and the fair market value (FMV) of the asset as on 31 January 2018. This has the effect of “grandfathering” all pre-February 2018 appreciation out of the taxable base.

Finance Act 2018 on WebNotes

Grandfathering rule for LTCG