Share-trading tax depends on how long you held and how you traded. Listed equity held over 12 months is LTCG at 12.5% (Section 112A) on gains above a ₹1.25 lakh yearly exemption. Held 12 months or less it is STCG at 20% (Section 111A). Intraday equity is speculative business income and F&O is non-speculative business income — both taxed at your slab rate. STT must have been paid for the concessional 112A/111A rates. These rates apply from 23 July 2024 and continue for FY 2025-26.
Share Trading Tax — Complete Summary (FY 2025-26)
Every equity income type, the rate that applies and the ITR form you file. Delivery-based gains are capital gains; intraday and F&O are business income.
| Trade type | Holding | Tax | ITR | Audit? |
|---|---|---|---|---|
| Delivery LTCG (listed equity) | > 12 months | 12.5% u/s 112A · ₹1.25L exempt | ITR-2 / ITR-3 | No |
| Delivery STCG (listed equity) | ≤ 12 months | 20% u/s 111A | ITR-2 / ITR-3 | No |
| Intraday (equity) | Same-day | Slab — speculative business | ITR-3 | Turnover > ₹10 Cr* |
| F&O (futures & options) | Contract-based | Slab — non-speculative business | ITR-3 | Turnover > ₹10 Cr* |
| Unlisted equity LTCG | > 24 months | 12.5% u/s 112 · no indexation | ITR-2 / ITR-3 | No |
| Unlisted equity STCG | ≤ 24 months | Slab | ITR-2 / ITR-3 | No |
*Tax audit u/s 44AB when turnover exceeds ₹10 crore (digital receipts & payments ≥95%), or below that if profit < 6% and total income exceeds the basic exemption. Rates verified on incometax.gov.in for FY 2025-26 (AY 2026-27).
STCG — held ≤ 12 months (111A)
- Flat 20% on the gain
- No ₹1.25 lakh exemption
- STT-paid listed equity & equity MF
- Rate raised from 15% on 23 Jul 2024
LTCG — held > 12 months (112A)
- 12.5% only on gains above ₹1.25 lakh/yr
- No indexation
- Grandfathering to 31-Jan-2018
- Rate raised from 10% on 23 Jul 2024
Budget 2024 raised equity STCG from 15% to 20% and LTCG from 10% to 12.5%, while lifting the LTCG exemption from ₹1 lakh to ₹1.25 lakh, effective 23 July 2024. Transfers between 1 April 2024 and 22 July 2024 still use the old 15% / 10% rates; from 23 July 2024 the new rates apply and continue unchanged for FY 2025-26.
How the Tax Actually Works
Suppose in FY 2025-26 you book ₹3,25,000 long-term gain on delivery shares and ₹1,00,000 short-term gain. LTCG uses the ₹1.25 lakh exemption; STCG does not.
LTCG 112A (held > 12m)
STCG 111A (held ≤ 12m)
Add 4% health & education cess (and surcharge if applicable). Estimate your liability with the income-tax calculator or the capital gains calculator, and report LTCG in Schedule 112A of your ITR.
Intraday and F&O — Business Income
Trades without delivery are business income, not capital gains, and are taxed at your slab rate. STT and other trading costs are deductible as business expenses here (unlike in capital gains).
- Intraday equity (buy & sell same day, no delivery) is speculative business income under Section 43(5).
- F&O (futures & options) is non-speculative business income.
- Both are reported in ITR-3 under Profits & Gains of Business or Profession — STT, brokerage, GST on brokerage and internet costs are deductible.
- A tax audit may apply once turnover crosses ₹10 crore, or below that if profit is under 6% and income exceeds the basic exemption.
For delivery-based capital gains, STT is not deductible from the gain — but paying STT is the condition for the concessional 112A/111A rates. For intraday and F&O (business income), STT is a deductible business expense in the P&L of ITR-3.
Grandfathering — Shares Bought Before 1 Feb 2018
Budget 2018 re-introduced LTCG tax on equity. To protect earlier investors, gains that accrued up to 31 January 2018 are grandfathered (protected) through a fair-market-value deemed cost.
| Scenario | Cost of acquisition | Effect |
|---|---|---|
| Bought before 1 Feb 2018 | Higher of actual cost, or lower of 31-Jan-2018 FMV & sale price | Gain up to 31-Jan-2018 FMV is protected |
| 31-Jan-2018 FMV > sale price | Cost = sale price | LTCG nil; artificial loss not recognised |
| Bought on/after 1 Feb 2018 | Actual purchase price | Normal 112A computation, no grandfathering |
FMV for listed shares = highest quoted price on a recognised exchange on 31-Jan-2018 (or last trading day before); for MF units it is the NAV on that date.
Example: bought in 2015 at ₹100; FMV on 31-Jan-2018 = ₹200; sold in 2025 at ₹280. Deemed cost = ₹200, taxable LTCG = ₹80 per share — the pre-2018 gain of ₹100 stays exempt.
Loss Set-off & Carry Forward
| Loss type | Set off (same year) against | Carry forward against | Years |
|---|---|---|---|
| STCG loss (delivery equity) | STCG or LTCG of any capital asset | STCG or LTCG | 8 |
| LTCG loss (delivery equity) | LTCG only (not STCG) | LTCG only | 8 |
| Intraday loss (speculative) | Speculative income only | Speculative income only | 4 |
| F&O loss (non-speculative) | Any income except salary | Non-speculative business income | 8 |
Capital losses cannot be set off against salary or business income. You must file the ITR by the due date to carry any loss forward.
Tax-loss harvesting can help if
- You have taxable 112A/111A gains this year
- You hold loss-making equity you can book
- You want to use the ₹1.25 lakh exemption every year
Be careful because
- LTCG loss sets off only against LTCG, not STCG
- Intraday loss offsets only speculative income
- The ₹1.25 lakh exemption does not carry forward
Which ITR Form Should You File?
- ITR-2 — salary + delivery-based capital gains (STCG/LTCG), no intraday or F&O
- ITR-3 — any intraday or F&O (business income); most active traders use this
- Both capital gains and F&O/intraday → use ITR-3
- Report LTCG scrip-wise in Schedule 112A with 31-Jan-2018 FMV where relevant
Traded shares, intraday or F&O this year? Get your capital gains and business income computed and filed right.
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