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Budget Insights

Budget 2022 - How the LTCG surcharge cap at 15% will benefit taxpayers

Sajhyadri C Posted on Dec 09, 2025

Table of Contents

Introduction

The Union Budget for the year 2022-23 was presented in Parliament by the Finance Minister Nirmala Sitharaman on the 1st of February 2022. The budget, pegged at Rs. 39.45 Lakh Crores indicates how much and on what the government plans to spend in this fiscal year – with the budget indicating an expected expenditure of 4.6% more, as compared to last year.

Of the few relief measures for individual taxpayers declared under the Union Budget 2022, one such was the capping of surcharge at 15% on long term gains accrued on all forms of assets. Let us now take an in-depth look at what exactly this means for you as a taxpayer.

Long Term Capital Gain Surcharge Capped at 15%

For the uninitiated, long term capital gain is usually paid when you as an investor sell a long-term capital asset – held for a minimum duration of more than twelve months in the case of equity shares, more than twenty four months in the case of shares that are unlisted or in the case of immovable property, and more than thirty six months for any other asset. While the basic tax rate levied on long term capital gain on assets used to range from ten to twenty percent depending on the asset class, surcharge refers to the additional charges levied based on your total income.

Before the recommended changes in the surcharge pricing, a cap of 15% was only applicable on long term capital gain on equity shares or equity-oriented mutual funds.

In the case of your income lying between Rs. 50 Lakhs and Rs. 1 Crore, you would be charged a surcharge of 10% on the long term gains generated by the assets you held.

In the case of your income lying between Rs. 1 Crore and Rs. 2 Crores, you would be charged a surcharge of 15% on the long term gains generated by the assets you held.

In the case of your income lying between Rs. 2 Crores and Rs. 5 Crores, you would be charged a surcharge of 25% on the long term gains generated by the assets you held.

Finally, if your income was above Rs. 5 Crores, you would be charged a surcharge of 37% on the long term gains generated by the assets you held. Thus, as per the revised capping norms, you will mainly benefit if your income lies above Rs. 2 Crores.

In her speech on the 1st of February 2022, the Finance Minister stated that in the past, while a maximum surcharge of 15% was only applicable on long term capital gains on equity shares and units, with the rate going up to as much as 37% on other graded assets – starting this fiscal year, the surcharge will 15% for gains arising from any form of asset.

This cap on the long term capital gain surcharge is a huge boon for individual taxpayers, further facilitating the sale of assets other than equity shares and mutual funds – such as those who earlier had to pay a higher surcharge in the case of sale of a property. Apart from being highly beneficial to individual taxpayers, these changes will also greatly abate the tax burden on those investing in startups, manufacturing, and bonds. This new change in the surcharge slabs is aimed to bring about greater uniformity among holders of the various long-term asset classes.

As a result of these revisions, you as an investor or entrepreneur with equity can expect more payback for helping build a company, which is in tandem with the Central Government’s ‘Make in India’ rhetoric.

The Net Impact on your ESOP Income

With the revisions in the long term capital gains surcharge slabs, through an example, let us now look at how this will impact your income tax computation:

Let us assume that Mr. X, a businessman, is a High-Net Worth individual and that as of June 2018, held certain shares of an unlisted company. Now, due to certain reasons, in February 2022, he decided to sell his holdings. Given that in this instance, he has been holding shares of an unlisted company, for well over a period of 24 months, any profits he would have realised from the same can now be categorised as long term capital gains.

If we assume that his earnings from capital gains amount to Rs. 3 Crores, the table below elucidates the tax impacts on his capital gains, both pre and post the Budget 2022:

-	Pre-Budget (before 31st March 2022)	Post Budget (after 1st April 2o22)
LTCG applicable on the sale of shares	Rs. 3,00,00,000	Rs. 3,00,00,000
Basic Tax on LTCG at 20% (A)	Rs. 60,00,000	Rs. 60,00,000
Surcharge applied on the above (B)	Rs. 15,00,000 (25%)	Rs. 9,00,000 (15%)
Effective Tax	26%	23.92%

Thus, as elucidated above, under the new slabs, Mr. X will be able to save taxes to a tune of 2.08%.Thus, as elucidated above, under the new slabs, Mr. X will be able to save taxes to a tune of 2.08%.

In a Nutshell

This proposed amendment in the Union Budget 2022 will be effective from the 1st of April 2022. If you opine that you may earn a crucial amount from selling capital assets, you may want to do so only in the next fiscal year, to avail of significant tax benefits.

Hi! I’m Sajhyadri C

Financial Content Specialist

Always ready to dive into new ideas and topics, Sajhyadri is a storyteller from Kolkata, the City of Joy. He enjoys weaving narratives that make finance feel less intimidating and more inspiring. As a financial content writer, he uses the power of the pen to craft insightful blogs, compelling video scripts, and marketing copies that catch the eye. Off duty, he’s either checking out the latest web series, listing out new eateries, or debating whether his favourite football team will finally have a better season!