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Guide · Capital Gains

Tax on Shares in India —
LTCG, STCG & Intraday

How stock market income is taxed — 12.5% LTCG above ₹1.25 lakh, 20% STCG on listed equity, intraday as speculative business, F&O as business income, plus loss set-off and the right ITR form.

TaxClue Editorial Desk Updated 18 August 2026 5 min read 16 FAQs answered
Updated for AY 2026-27 CA reviewed Post Budget 2024 rates
Quick Answer

For listed equity shares (STT paid), gains held over 12 months are long-term (LTCG), taxed at 12.5% under Section 112A on gains above a ₹1.25 lakh yearly exemption — no indexation. Gains held 12 months or less are short-term (STCG), taxed at 20% under Section 111A. Intraday trading is speculative business income at slab rates; F&O is non-speculative business income at slab rates. Both LTCG and STCG rates were raised in Budget 2024 (effective 23 July 2024) and continue for FY 2025-26.

LTCG 12.5%
STCG 20%
LTCG exempt ₹1.25 L
Intraday Slab
At a glance

Share Trading Tax Rates — FY 2025-26

Every common way of trading shares, the tax head it falls under, the rate and the ITR form. LTCG and STCG on listed equity are covered by Section 112A and Section 111A.

Trade typeHoldingTax headRateITR form
Listed equity (delivery)> 12 monthsLTCG u/s 112A12.5% above ₹1.25 LITR-2 / 3
Listed equity (delivery)≤ 12 monthsSTCG u/s 111A20%ITR-2 / 3
Intraday equitySame daySpeculative businessSlab rateITR-3
F&O (futures & options)AnyNon-speculative businessSlab rateITR-3
Unlisted equity shares> 24 monthsLTCG12.5% (no indexation)ITR-2 / 3
Unlisted equity shares≤ 24 monthsSTCGSlab rateITR-2 / 3

Add 4% health & education cess (and surcharge, if any) on the tax. Surcharge on 111A/112A gains is capped at 15%. Rates verified on incometax.gov.in for FY 2025-26 (AY 2026-27).

20%

STCG — held ≤ 12 months (111A)

  • Listed equity / equity MF with STT paid
  • Flat 20% — no basic exemption for the gain
  • No ₹1.25 lakh cushion (that is LTCG only)
  • Held 12 months or less
vs
12.5%

LTCG — held > 12 months (112A)

  • Listed equity / equity MF with STT paid
  • First ₹1.25 lakh a year is exempt
  • No indexation; grandfathering to 31-Jan-2018
  • Held more than 12 months
The 23 July 2024 change — higher equity rates

Budget 2024 raised equity STCG from 15% to 20% and equity LTCG from 10% to 12.5%, lifted the LTCG exemption from ₹1 lakh to ₹1.25 lakh, and withdrew indexation. Transfers up to 22 July 2024 still use the old 15% / 10% rates; from 23 July 2024 the new rates apply and continue in FY 2025-26.

Worked example

How the Tax Is Actually Calculated

Two common cases — a long-term sale that uses the ₹1.25 lakh exemption, and a short-term sale taxed flat at 20%.

LTCG · shares held > 12 months

Sale value₹8,00,000
Less: cost₹5,00,000
Long-term gain₹3,00,000
Less: yearly exemption₹1,25,000
Taxable LTCG₹1,75,000
Tax @ 12.5%₹21,875
Tax payable (+cess)≈ ₹22,750

STCG · shares held ≤ 12 months

Sale value₹3,00,000
Less: cost₹2,00,000
Short-term gain₹1,00,000
No exemption—
Tax @ 20%₹20,000
Tax payable (+cess)≈ ₹20,800

Estimate your own liability with the income-tax calculator and report gains in Schedule CG (112A / 111A) of your ITR. Your broker (Zerodha, Upstox, Groww, etc.) provides a capital-gains statement, and the AIS on incometax.gov.in reflects high-value trades.

Grandfathering for shares bought before 31 January 2018

For listed shares/equity MF units acquired before 31-Jan-2018, the cost of acquisition is taken as the higher of your actual cost or the lower of the 31-Jan-2018 FMV and the sale price — so pre-2018 gains stay protected. This grandfathering does not apply to units/shares bought on or after that date.

Not capital gains

Intraday & F&O — Taxed as Business Income

Intraday equity trades and derivatives are not capital gains — they are business income taxed at your slab rate, reported in ITR-3. The key split is speculative vs non-speculative, which changes how losses can be used.

ActivityClassificationTaxed atLoss carry-forward
Intraday equity (same-day buy/sell)Speculative businessSlab rate4 years
F&O — futures & optionsNon-speculative businessSlab rate8 years
Delivery equity (investment)Capital gains12.5% / 20%8 years

A tax audit may apply to F&O/intraday based on turnover and declared profit; maintain contract notes and a trading log.

Speculative losses are ring-fenced

Intraday (speculative) losses can be set off only against speculative profits — never against salary, F&O, or capital gains — and carry forward just 4 years. F&O (non-speculative) losses are more flexible: they can be set off against any income except salary and carry forward 8 years.

Trading intraday or F&O? Get your business income, turnover and audit position sorted.

Talk to a CA →
If you make a loss

Capital-Loss Set-off & Carry Forward

Loss typeSet off againstCannot set off againstCarry forward
STCG loss (listed equity)Any STCG + any LTCGSalary, interest, business income8 years
LTCG loss (listed equity)LTCG onlySTCG, salary, business income8 years
Intraday speculative lossSpeculative profit onlyEverything else4 years
F&O (non-speculative) lossAny income except salarySpeculative profit8 years

You must file the ITR by the due date to carry any loss forward.

Tax-loss harvesting can help if

  • You have taxable equity 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

  • LTCG loss offsets only LTCG, not STCG
  • The ₹1.25 lakh exemption does not carry forward
  • Re-buying immediately resets your holding period

Sold shares or mutual funds this year? Get your capital gains computed and filed correctly.

File ITR with a CA →
Government sourcesSections 111A, 112A & 112, Income-tax Act 1961: incometax.gov.in · Rate change (Budget 2024, eff. 23 Jul 2024): STCG 20% / LTCG 12.5% / exemption ₹1.25 L · Surcharge on 111A/112A gains capped at 15%: incometax.gov.in tax rates · Grandfathering to 31-Jan-2018: Section 112A(3)–(6) & CBDT Notification 60/2018
People also ask

Frequently Asked Questions

Rates
What is the tax on long-term capital gains (LTCG) on shares?
LTCG on listed equity shares held more than 12 months (with STT paid on sale) is taxed at 12.5% under Section 112A, on gains above a ₹1.25 lakh yearly exemption, without indexation, plus 4% cess. This rate applies to transfers on or after 23 July 2024 (earlier 10% with a ₹1 lakh exemption) and continues for FY 2025-26. Example: gain of ₹3 lakh minus the ₹1.25 lakh exemption = ₹1.75 lakh taxable at 12.5% = ₹21,875 plus cess.
What is the tax on short-term capital gains (STCG) on shares?
STCG on listed equity shares held 12 months or less (STT paid) is taxed at a flat 20% under Section 111A, plus 4% cess, with no exemption for the gain. This rate applies to transfers on or after 23 July 2024 (earlier 15%) and continues for FY 2025-26. For unlisted shares, gains held 24 months or less are taxed at your slab rate.
What are the tax rates on shares for FY 2025-26?
For listed equity with STT paid: LTCG (over 12 months) 12.5% above ₹1.25 lakh, and STCG (12 months or less) 20%. Both rates were raised in Budget 2024 effective 23 July 2024 and remain unchanged in FY 2025-26 / AY 2026-27. Intraday is taxed at slab rates as speculative business, and F&O at slab rates as non-speculative business.
How much share profit is tax-free in a year?
For long-term gains on listed equity shares and equity mutual funds, the first ₹1.25 lakh of LTCG each financial year is tax-free under Section 112A. There is no similar exemption for short-term gains (111A) or for intraday/F&O business income. Many investors book gains up to ₹1.25 lakh each year to use this exemption.
Is indexation available on shares?
No. Indexation is not available on listed equity shares or equity mutual funds under Section 112A — the 12.5% is applied to the plain gain (subject to grandfathering for pre-2018 holdings). Budget 2024 also withdrew indexation for most other assets from 23 July 2024, with limited relief only for certain pre-23-July-2024 immovable property.
Is there a surcharge cap on capital gains from shares?
Yes. The surcharge on capital gains under Sections 111A and 112A (and 112) is capped at 15%, even if your total income would otherwise attract a higher surcharge of 25% or 37%. This keeps the effective rate on large equity gains lower than on ordinary income for high earners.
Holding & Type
How is intraday stock trading taxed?
Intraday trading (buying and selling the same day without delivery) is treated as speculative business income and taxed at your income slab rate, not as capital gains. It is reported in ITR-3. Speculative losses can be set off only against speculative profits and carried forward for 4 years. Keep contract notes and a trading log, as a tax audit may apply based on turnover.
How is F&O trading taxed?
Futures and options (F&O) trading is non-speculative business income, taxed at your slab rate and reported in ITR-3. F&O losses can be set off against any income except salary and carried forward for 8 years, which is more flexible than intraday speculative losses. Tax-audit applicability depends on turnover and declared profit.
What is the holding period for long-term shares?
For listed equity shares and equity mutual fund units, more than 12 months is long-term (LTCG at 12.5%); 12 months or less is short-term (STCG at 20%). For unlisted shares, the long-term threshold is 24 months, after which gains are taxed at 12.5% without indexation, while shorter holdings are taxed at slab rates.
How are unlisted shares taxed?
Unlisted equity shares held more than 24 months give long-term gains taxed at 12.5% without indexation. If held 24 months or less, the gain is short-term and taxed at your income slab rate. The ₹1.25 lakh exemption and the 111A/112A framework apply only to listed shares on which STT is paid.
Losses & Filing
Can I set off stock market losses against other income?
STCG losses on listed equity can be set off against any STCG or LTCG, but not against salary, interest or other income. LTCG losses can be set off only against LTCG. Both carry forward 8 years if you file the ITR on time. Intraday speculative losses offset only speculative profits (carry forward 4 years); F&O losses offset any income except salary (carry forward 8 years).
How do I report share trading in my ITR?
Report delivery-based capital gains in Schedule CG of ITR-2 or ITR-3 — LTCG under 112A and STCG under 111A, scrip-wise, using your broker capital-gains statement. Intraday and F&O business income goes in ITR-3. The AIS on incometax.gov.in shows high-value stock transactions, so reconcile your figures with it before filing.
Which ITR form should a stock investor use?
An investor with only capital gains from delivery-based shares usually files ITR-2. Anyone with intraday or F&O activity (business income) must file ITR-3. A salaried person with a small LTCG may use ITR-1 in limited cases, but any capital-gains complexity or business income pushes you to ITR-2 or ITR-3.
What is grandfathering for shares bought before 31 January 2018?
For listed shares or equity MF units bought before 31 January 2018, the cost of acquisition is deemed to be the higher of your actual cost or the lower of the 31-Jan-2018 fair market value and the sale price. This protects the gain that accrued up to 31-Jan-2018, so only later appreciation is taxed. It does not apply to purchases made on or after that date.
Is TDS deducted on capital gains from shares for residents?
No TDS is deducted on capital gains of resident investors selling listed shares or mutual funds; you pay the tax yourself as advance tax or at filing. For non-residents, TDS may apply under Section 195/196A. Booking losses before year-end (tax-loss harvesting) is a common way to use the ₹1.25 lakh LTCG exemption and reduce net gains.
Does the new tax regime change the tax on shares?
No. Capital gains on shares are taxed at their special rates — 12.5% LTCG and 20% STCG — under both the old and the new regime. Choosing a regime only affects how your normal slab income (salary, interest, business) is taxed, not these equity gains.
If you would rather not do it yourself

Related TaxClue services

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