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Guide · Capital Gains

Tax on Capital Gains from Shares STCG 20% · LTCG 12.5%

How short-term and long-term capital gains on listed equity shares, equity mutual funds and unlisted shares are taxed after the 23 July 2024 change — rates, the ₹1.25 lakh exemption, holding periods, grandfathering and loss set-off.

Written by
TaxClue Editorial Desk
Updated
18 August 2026
Reading time
5 min
Questions
16 answered
  • Updated for AY 2026-27
  • CA reviewed
  • Post 23 Jul 2024 rates
Quick Answer

For transfers on or after 23 July 2024: gains on listed equity shares & equity mutual funds held up to 12 months are short-term, taxed at 20% under Section 111A; held over 12 months they are long-term, taxed at 12.5% under Section 112A on gains above a ₹1.25 lakh yearly exemption, with no indexation. Unlisted shares turn long-term after 24 months and are taxed at 12.5% without indexation (STCG at slab). STT must be paid for the equity concessional rates.

At a glance

Capital Gains on Shares — Full Rate Table

Every common scenario, with holding period, the old rate (up to 22 Jul 2024) and the current rate (from 23 Jul 2024). Listed-equity gains are reported in Schedule 112A / 111A of ITR-2.

AssetHoldingTypeOld rate (≤22 Jul 24)Current rate (≥23 Jul 24)STT
Listed equity shares≤ 12 monthsSTCG (111A)15%20%Yes
Listed equity shares> 12 monthsLTCG (112A)10% above ₹1L12.5% above ₹1.25LYes
Equity mutual funds≤ 12 monthsSTCG (111A)15%20%Via fund
Equity mutual funds> 12 monthsLTCG (112A)10% above ₹1L12.5% above ₹1.25LVia fund
Unlisted shares≤ 24 monthsSTCGSlab ratesSlab ratesNo
Unlisted shares> 24 monthsLTCG20% with index.12.5% no index.No
Debt mutual funds (bought ≥1 Apr 2023)AnySTCGSlab ratesSlab ratesNo

Add 4% cess (and surcharge if applicable) on the tax. Debt-fund units bought before 1 Apr 2023 & held > 24 months are taxed at 12.5% without indexation.

The 23 July 2024 change raised both equity rates

Finance (No. 2) Act 2024 raised STCG on listed equity from 15% to 20% and LTCG from 10% to 12.5%, while lifting the LTCG exemption from ₹1 lakh to ₹1.25 lakh and withdrawing indexation. If you sold in FY 2024-25 both before and after 23 Jul 2024, each slice is taxed at its own date-based rate. These rates continue unchanged for FY 2025-26.

Two regimes

STCG vs LTCG on Listed Shares

The only difference is the holding period at the moment of sale — but it changes the rate, the exemption and the loss rules.

20%

STCG · Section 111A

  • Holding up to 12 months
  • Flat 20%, regardless of your slab
  • No ₹1.25 lakh exemption
  • STCL sets off vs STCG and LTCG
  • STT paid on a recognised exchange
12.5%

LTCG · Section 112A

  • Holding over 12 months
  • 12.5% on gains above ₹1.25 lakh/yr
  • No indexation; grandfathered to 31-Jan-2018
  • LTCL sets off only vs LTCG
  • STT paid on buy and sell
Worked example

How the Tax Is Calculated

Suppose in FY 2025-26 you book ₹80,000 short-term gain and ₹3,25,000 long-term gain on listed shares.

STCG u/s 111A

Short-term gain₹80,000
ExemptionNil
Taxable STCG₹80,000
Tax @ 20%₹16,000
Tax (+4% cess)≈ ₹16,640

LTCG u/s 112A

Long-term gain₹3,25,000
Less: exemption₹1,25,000
Taxable LTCG₹2,00,000
Tax @ 12.5%₹25,000
Tax (+4% cess)≈ ₹26,000

Estimate your liability with the income-tax calculator and check where your other income sits against the income-tax slabs. Deep-dive the special rates in our Section 111A and Section 112A guides.

Sold shares or mutual funds this year? Get your STCG & LTCG computed and filed correctly.

File ITR with a CA →
What shifted on 23 July 2024

Budget 2024 — Rate Change & STT Rule

The concessional 20% (STCG) and 12.5% (LTCG) rates on listed equity apply only when Securities Transaction Tax (STT) has been paid on the transaction. Equity mutual funds qualify because the fund pays STT. If STT was not paid — for example an off-market transfer — the gain falls outside 111A/112A and is taxed under the general rules for that asset.

  • Listed equity & equity MF: STCG 15%→20%, LTCG 10%→12.5%, exemption ₹1L→₹1.25L, indexation withdrawn.
  • Unlisted shares: LTCG moved from 20% with indexation to 12.5% without indexation, aligning with listed equity.
  • Split-year sales: gains before 23 Jul 2024 keep the old rate; from 23 Jul 2024 the new rate applies, based on the sale date.
  • Debt funds bought on/after 1 Apr 2023: always taxed at slab rates — no LTCG rate, no indexation.
TaxClue Insight — special rates ignore your slab

STCG at 20% and LTCG at 12.5% on listed equity are flat special rates, applied regardless of whether you are on the old or the new tax regime. Choosing a regime only affects your salary/business (slab) income — not these equity gains.

Pre-2018 protection

Grandfathering — Shares Bought Before 31 Jan 2018

When LTCG on equity was reintroduced from 1 April 2018, gains that had already accrued were protected. For shares/units bought before 31 January 2018, the cost of acquisition is the higher of (A) actual cost, or (B) the lower of the 31-Jan-2018 FMV and the sale price.

  1. 1Actual cost (A)What you originally paid
  2. 2FMV vs sale (B)Lower of 31-Jan-2018 FMV & sale price
  3. 3Deemed costHigher of A and B
  4. 4Taxable LTCGSale price − deemed cost

Example: bought in 2015 at ₹100; FMV on 31-Jan-2018 = ₹200; sold in 2025 at ₹280. Deemed cost = ₹200, so taxable LTCG = ₹80 per share — the pre-2018 gain stays exempt. For shares, FMV is the highest quoted price on a recognised exchange on 31-Jan-2018; for MF units, the NAV that day.

If you make a loss

Set-off & Carry Forward of Capital Losses

  • Short-term capital loss (STCL) sets off against both STCG and LTCG from any capital asset.
  • Long-term capital loss (LTCL) sets off only against LTCG — never against STCG or other heads.
  • Unabsorbed STCL and LTCL carry forward for 8 assessment years, each against its own type of gain.
  • Capital losses can never be set off against salary, business or house-property income.
  • To carry a loss forward you must file your ITR by the due date.

✓Tax-loss harvesting can help if

  • You have taxable gains this year
  • You hold loss-making shares you can book
  • You want to use the ₹1.25 lakh LTCG exemption yearly

!Be careful because

  • LTCL sets off only against LTCG
  • The ₹1.25 lakh exemption does not carry forward
  • Re-buying immediately resets the holding period
Sources
  1. Sections 111A & 112A, Income-tax Act 1961: incometax.gov.in
  2. Rates from 23 Jul 2024 (Finance (No. 2) Act 2024): STCG 20%, LTCG 12.5% above ₹1.25 lakh
  3. Schedule 112A / 111A reporting: ITR-2 for AY 2026-27, incometax.gov.in
  4. Debt-fund slab taxation (units ≥1 Apr 2023): Finance Act 2023

Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position or speak to our CA team before you act on it.

People also ask

Questions, answered

Short, direct answers to the 16 questions readers ask most on this topic.

For listed equity shares and equity mutual funds sold on or after 23 July 2024: short-term gains (holding up to 12 months) are taxed at 20% under Section 111A, and long-term gains (holding over 12 months) at 12.5% under Section 112A on the amount above a ₹1.25 lakh yearly exemption, without indexation. STT must have been paid. These rates continue unchanged for FY 2025-26 (AY 2026-27).

Short-term capital gains on listed equity shares and equity-oriented mutual funds held for 12 months or less are taxed at a flat 20% under Section 111A (plus 4% cess and any surcharge), for transfers on or after 23 July 2024. Before that date the rate was 15%. The 20% applies regardless of your income slab, provided STT was paid.

Long-term capital gains on listed equity shares and equity mutual funds held over 12 months are taxed at 12.5% under Section 112A, on gains above the ₹1.25 lakh yearly exemption, without indexation. Before 23 July 2024 the rate was 10% with a ₹1 lakh exemption. The 12.5% / ₹1.25 lakh position holds for FY 2025-26.

The first ₹1.25 lakh of long-term capital gains from listed equity shares, equity mutual funds and business-trust units is exempt every financial year. Only the gain above ₹1.25 lakh is taxed at 12.5%. It is a single combined threshold — not per share, per fund or per transaction — and it does not carry forward if unused.

Take a ₹3,25,000 long-term gain: subtract the ₹1.25 lakh exemption to get ₹2,00,000 taxable, then 12.5% = ₹25,000 (about ₹26,000 with cess). For a ₹80,000 short-term gain, 20% = ₹16,000 (about ₹16,640 with cess). Short-term and long-term gains are taxed separately at their own rates.

STCG arises when listed equity shares or equity mutual funds are sold within 12 months, taxed at 20% under Section 111A. LTCG arises when held over 12 months, taxed at 12.5% under Section 112A above the ₹1.25 lakh exemption. For unlisted shares the long-term threshold is 24 months. The classification also changes the loss set-off rules.

Listed equity shares and equity mutual fund units become long-term after being held for more than 12 months. Unlisted shares become long-term only after 24 months. Below these periods the gain is short-term — 20% for listed equity (111A) and slab rates for unlisted shares.

Yes. The 20% STCG (111A) and 12.5% LTCG (112A) rates on listed equity apply only where Securities Transaction Tax has been paid — on both buy and sell for LTCG. STT on purchase is waived for notified cases like IPO, FPO, ESOP and bonus/rights. Equity mutual funds qualify because the fund pays STT. Off-market transfers without STT fall outside these sections.

Effective 23 July 2024, STCG on listed equity rose from 15% to 20% and LTCG from 10% to 12.5%, while the LTCG exemption rose from ₹1 lakh to ₹1.25 lakh and indexation was withdrawn. Unlisted shares moved from 20% with indexation to 12.5% without indexation. These rates are unchanged for FY 2025-26.

The gains are split by sale date. Shares sold up to 22 July 2024 use the old rates (STCG 15%, LTCG 10% with ₹1 lakh exemption); shares sold on or after 23 July 2024 use the new rates (STCG 20%, LTCG 12.5% with ₹1.25 lakh exemption). The ITR utility handles the two periods separately.

No. The 20% STCG and 12.5% LTCG on listed equity are flat special rates applied irrespective of whether you are on the old or new tax regime. Your regime choice only affects how your salary and other slab income are taxed, not these equity capital gains.

Unlisted shares are long-term if held over 24 months, taxed at 12.5% without indexation (for transfers on or after 23 July 2024). If held for 24 months or less the gain is short-term and taxed at your slab rates. STT is not paid on unlisted shares, so Sections 111A/112A do not apply.

Units of specified debt mutual funds purchased on or after 1 April 2023 are always taxed at your slab rates regardless of holding period, with no long-term rate or indexation (Finance Act 2023). Units bought before 1 April 2023 and held over 24 months are taxed at 12.5% without indexation.

For shares/units bought before 31 January 2018, the cost of acquisition is the higher of your actual cost or the lower of the 31-Jan-2018 FMV and the sale price. This exempts any gain that had accrued up to 31-Jan-2018, so only later appreciation is taxed under 112A. For shares FMV is the highest quoted price that day; for MF units it is the NAV.

Short-term capital loss can be set off against both short-term and long-term gains from any asset. Long-term capital loss can be set off only against long-term gains. Any unabsorbed loss carries forward for 8 assessment years against the same type of gain, provided you file the ITR on time. Losses cannot be set off against salary or business income.

Report capital gains on shares in ITR-2 (or ITR-3 if you also have business income), giving scrip-wise details in Schedule 112A for listed-equity LTCG and Schedule CG for the rest. A small LTCG may be allowed in ITR-1/4 in limited cases. TaxClue computes the gains and files the return with a CA reviewing the capital-gains schedule.