Income Tax on Share Trading — LTCG, STCG, FnO & Intraday Rules
Updated: 3 June 2026 | Income-tax Act 2025 | Budget 2024 Changes
Share trading tax: LTCG 12.5% on gains >₹1.25L/year (equity held >1 year). STCG 20% (equity held ≤1 year, from July 23, 2024). Intraday: slab rates (speculative). FnO: slab rates (non-speculative business). FnO losses carry forward 8 years. STT 0.1% on transactions.
12.5%
LTCG on listed equity — held more than 1 year. ₹1.25L exemption per year. Budget 2024 raised from 10%.
STCG: 20% (raised from 15%, from July 23, 2024). FnO/intraday: slab rates — file ITR-3 as business income. No indexation for equity LTCG.
STCG: 20% (raised from 15%, from July 23, 2024). FnO/intraday: slab rates — file ITR-3 as business income. No indexation for equity LTCG.
Share Trading — Tax Summary
| Trade Type | Tax Rate | Income Head | ITR Form |
|---|---|---|---|
| Equity held >1 year (LTCG) | 12.5% (above ₹1.25L) | Capital Gains | ITR-2 |
| Equity held ≤1 year (STCG) | 20% | Capital Gains | ITR-2 |
| Intraday trading | Slab rates | Speculative Business | ITR-3 |
| FnO (Futures & Options) | Slab rates | Non-Speculative Business | ITR-3 |
| Equity MF held >1 year | 12.5% (above ₹1.25L) | Capital Gains | ITR-2 |
| Debt MF (any period) | Slab rates | Capital Gains (STCG) | ITR-2 |
Frequently Asked Questions
How is income from share trading taxed in India?
Share trading income tax depends on the TYPE of trade: (1) Long-term capital gains (LTCG) on listed equity held > 1 year: 12.5% tax on gains above ₹1,25,000/year (exempt below this). (2) Short-term capital gains (STCG) on listed equity held ≤ 1 year: 20% flat (from July 23, 2024, Budget 2024 change from 15%). (3) Intraday trading (same-day buy/sell): "Speculative Business Income" — added to other income, taxed at slab rates. (4) Futures and Options (FnO) trading: "Non-speculative Business Income" — slab rates apply. NOT capital gains. Must maintain books + audit if FnO turnover > threshold. (5) Delivery-based trading (holding > 1 day): capital gains (LTCG or STCG based on holding period). STT (Securities Transaction Tax) is a separate tax, not income tax.
What is the tax rate on LTCG from shares?
Long-term Capital Gains (LTCG) on shares — Budget 2024 rules (from July 23, 2024): Rate: 12.5% on LTCG. Exemption: gains up to ₹1,25,000 per year are EXEMPT. Tax only on amount above ₹1.25L. Indexation: NOT available for equity shares/equity mutual funds. Qualifying: listed equity shares held > 1 year, equity-oriented mutual funds held > 1 year. Grandfathering: shares bought before January 31, 2018 — cost basis = higher of actual cost or fair market value on January 31, 2018. Example: Bought 2021 @ ₹100, sold 2026 @ ₹200. Gain = ₹100/share. If total gains ₹3L: exempt ₹1.25L, taxable ₹1.75L at 12.5% = ₹21,875 tax. Unlisted equity: 12.5% LTCG after 24 months. No exemption for unlisted shares. 10% TDS on LTCG if >₹1.25L.
How is FnO (Futures and Options) trading taxed?
FnO (Futures and Options) tax treatment: Classified as: Non-speculative Business Income (NOT capital gains). Section 43(5): FnO trading is NOT speculative business. Tax rate: added to total income, taxed at slab rates. Turnover calculation for FnO: absolute sum of profit + loss on all trades (per ICAI guidance). For tax audit threshold: FnO turnover > ₹10 crore requires audit. If FnO turnover > ₹1Cr (traditional) or > ₹10Cr (>95% digital): audit under Section 44AB. Losses: FnO losses can be set off against any business income (not just share market). Carry forward: up to 8 years (as business loss). Cannot set off against salary. ITR form: ITR-3 (because it's business income). Advance tax: quarterly installments required if tax > ₹10,000. Expenses: brokerage, internet charges, trading platform fees, advisory fees — all deductible.
Can share trading losses be set off against other income?
Capital loss set-off rules: STCL (Short-term Capital Loss): can set off against STCG or LTCG. LTCL (Long-term Capital Loss): can ONLY set off against LTCG — NOT against STCG or other income. Example: ₹1L LTCL from shares — can only set off against LTCG from shares, property, or other long-term assets. Carry forward: capital losses can be carried forward for 8 assessment years. Must file ITR by due date to carry forward losses. Speculative loss (intraday): can ONLY be set off against speculative profit. Cannot set off against non-speculative business income or salary. FnO loss: non-speculative business loss — can set off against any business income (not salary). Against other heads: capital losses cannot be set off against salary, FD interest, or other income. Wash sale rule: India does not have a wash sale rule — you can sell and immediately repurchase.
What is STT and how does it affect share trading taxes?
STT (Securities Transaction Tax): a separate tax on purchase/sale of securities — not an income tax but reduces effective returns. Current STT rates (Budget 2024 revision): Equity delivery (buy + sell): 0.1% on each transaction. Equity intraday (only sell): 0.025%. FnO options (sell side): 0.1% on option premium. FnO futures (sell side): 0.02% on futures price. Equity mutual fund units (sell/repurchase): 0.001%. STT is not deductible as business expense for LTCG (Section 48 — STT not deductible for LTCG calculation). STT is deductible as business expense for FnO/intraday income (because it's business income). STT ensures LTCG qualifies for the 12.5% rate (LTCG on listed equity is concessional only if STT was paid on acquisition/sale). No STT = classified as unlisted equity (12.5% after 24 months but no ₹1.25L exemption). Rebate: no rebate on STT — it's over and above income tax.
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