On 1st February 2018, the honorable finance minister Shri. Arun Jaitley re-introduced the long term capital gain tax on stocks. The indian markets started to react on this by moving straight towards southward direction after hitting its all time high levels. In 2004, UPA government scrapped the long term capital gain tax and introduced the STT (Securities Transaction Tax) to stop tax avoidance of capital gains tax. Now, the LTCG tax on shares is applicable to the investor who is making profit exceeding Rs 1 lakh from the sale of shares or equity mutual fund schemes held for over one year. A long-term investor in stocks for tax is applicable for helding shares by over one year. The Budget proposes that LTCG tax will be applicable on profit booked after March 31. “This means that for sale of shares made till March, the existing law will apply and this tax will not be applicable,” said Gautam Mehra, leader – India Tax and Regulatory, PwC. Because of this we may see a correction cum downside era till 31st March, 2018 in indian market to avoid LTCG tax. We don’t think that the investors who are helding the shares for last 10 to 15 years, will carry the same for further long period. The investors would sell off some of their holdings to avoid losing their money in form of LTCG tax and may buy something else. In future to avoid LTCG tax, investor would take some understanding and work accordingly. Since Rs 1 lakh of LTCG on stocks every year is tax free, at the end of every year, investor could sell the investment that would generate that much returns and immediately buy it again. It would save Rs 10,000 a year as LTCG tax is 10% on the profit exceeding rupees 1 lakh. So, if an investor made long-term gains of Rs 150,000 in a year, LTCG tax is applicable for Rs 50,000 (Rs 150,000-100,000).