Income Tax on Share Trading —
LTCG, STCG, Intraday & FnO
How every kind of stock-market income is taxed in India — long-term and short-term capital gains, intraday speculative income, futures & options business income, loss set-off, ITR forms and STT.
How your share-trading income is taxed depends entirely on the type of trade. Listed-equity gains held more than one year are LTCG taxed at 12.5% on gains above Rs1,25,000 a year; held one year or less they are STCG taxed at 20%. Intraday trading is speculative business income and FnO is non-speculative business income — both taxed at your slab rate. STT is a separate transaction tax, not income tax.
Share Trading Tax — Complete Table (AY 2026-27)
Every common stock-market income type, its tax head, rate and the correct ITR form for FY 2025-26.
| Trade Type | Tax Rate | Income Head | ITR Form |
|---|---|---|---|
| Listed equity held > 1 year (LTCG) | 12.5% | Capital Gains | ITR-2 |
| Listed equity held ≤ 1 year (STCG) | 20% | Capital Gains | ITR-2 |
| Equity mutual fund held > 1 year | 12.5% | Capital Gains | ITR-2 |
| Intraday trading (same-day) | Slab rates | Speculative Business | ITR-3 |
| Futures & Options (FnO) | Slab rates | Non-Speculative Business | ITR-3 |
| Unlisted shares held > 24 months | 12.5% | Capital Gains (LTCG) | ITR-2 |
| Dividend income | Slab rates | Other Sources | ITR-1/2 |
Rates reflect the Budget 2024 capital-gains regime effective 23 July 2024 and continue for FY 2025-26 (AY 2026-27). No indexation for listed equity. Confirm on incometax.gov.in before filing.
Budget 2024 raised LTCG on listed equity from 10% to 12.5% and STCG from 15% to 20%, effective 23 July 2024. Trades before and after that date in FY 2024-25 followed different rates; for FY 2025-26 the new rates apply for the whole year.
LTCG vs STCG on Listed Shares
For delivery-based trading (you hold the shares in your demat), the holding period decides everything. Listed equity held for more than 12 months is long-term; 12 months or less is short-term.
LTCG — held more than 1 year
- Listed equity & equity mutual funds
- First Rs1,25,000 of gains exempt each year
- Flat 12.5% on gains above the exemption
- No indexation benefit for equity
- Grandfathering: cost = higher of actual cost or FMV on 31 Jan 2018
STCG — held 1 year or less
- Listed equity & equity mutual funds
- Flat 20% under Section 111A
- No basic-exemption cushion on the gain itself
- Applies to sales on or after 23 Jul 2024
- STT must be paid for the concessional rate
Both concessional rates apply only to STT-paid listed equity. Debt mutual funds and unlisted or off-market shares follow different rules — see the tax on capital gains from shares guide.
Not sure whether your gains are long-term or short-term?
Get My Capital Gains Computed →Intraday & FnO — Business Income
Intraday and derivatives are not capital gains. Intraday equity (buy and sell the same day, no delivery) is speculative business income. Futures & Options is non-speculative business income under Section 43(5). Both are added to your total income and taxed at your slab rate.
- Deductible expenses — brokerage, STT (for business income), internet, platform & advisory fees, depreciation on trading equipment.
- Tax audit under Section 44AB may apply based on turnover; digital-transaction traders get the higher Rs10 crore limit.
- Advance tax is payable in quarterly instalments if total tax exceeds Rs10,000 — see advance tax.
- Business income is filed in ITR-3; you cannot use ITR-1 or ITR-2 for FnO/intraday.
For FnO, turnover is the absolute sum of all profits and losses on each trade (per ICAI guidance) — not the notional contract value. Mis-computing it is the most common reason traders wrongly conclude an audit is or is not required.
LTCG on Rs3,00,000 of Gains
12.5% LTCG on listed equity
20% STCG on listed equity
Figures are before cess (4%) and any surcharge, and assume the Rs1.25L LTCG exemption is not already used by other long-term gains. Try the income tax calculator for your full liability.
Trading Losses — What You Can Set Off
Loss set-off follows strict rules by category. File your ITR by the due date, or you lose the right to carry losses forward. See carry-forward of losses for the full mechanics.
| Loss Type | Set Off Against | Carry Forward | Against Salary? |
|---|---|---|---|
| Short-term capital loss (STCL) | STCG or LTCG | 8 years | No |
| Long-term capital loss (LTCL) | LTCG only | 8 years | No |
| Intraday (speculative) loss | Speculative profit only | 4 years | No |
| FnO (non-speculative) loss | Any business income | 8 years | No |
India has no wash-sale rule — you may sell and immediately repurchase. Losses can never be set off against salary income.
You can carry forward if
- You file the ITR on or before the due date
- The loss is correctly classified by head
- You maintain trade & broker statements
You lose the benefit if
- You file a belated return (capital/business loss lapses)
- You try to net FnO loss against salary
- You mix speculative and non-speculative losses
Have trading losses to carry forward this year?
File ITR With TaxClue →STT and Choosing the Right ITR
Securities Transaction Tax (STT) is levied on the purchase/sale of listed securities. It is not income tax, but paying STT is what makes your equity gains eligible for the concessional 12.5%/20% rates.
| Transaction | STT Rate | Charged On |
|---|---|---|
| Equity delivery (buy & sell) | 0.1% | Each side of the trade |
| Equity intraday (sell side) | 0.025% | Sell value |
| Options (sell side) | 0.1% | Option premium |
| Futures (sell side) | 0.02% | Futures price |
| Equity MF units (sell) | 0.001% | Redemption value |
STT is not deductible while computing LTCG (Section 48) but is a deductible expense for intraday/FnO business income.
- Only capital gains (delivery LTCG/STCG) → ITR-2.
- Any intraday or FnO income/loss → ITR-3 (business income).
- Report each capital-gains transaction in Schedule CG; reconcile with your AIS and broker P&L.
Most notices to traders come from AIS/broker mismatches, wrong ITR selection, or missing the FnO audit. Classify each income stream correctly, reconcile with your AIS, and file on time to preserve loss carry-forward.
Frequently Asked Questions
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