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.
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.
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.
| Asset | Holding | Type | Old rate (≤22 Jul 24) | Current rate (≥23 Jul 24) | STT |
|---|---|---|---|---|---|
| Listed equity shares | ≤ 12 months | STCG (111A) | 15% | 20% | Yes |
| Listed equity shares | > 12 months | LTCG (112A) | 10% above ₹1L | 12.5% above ₹1.25L | Yes |
| Equity mutual funds | ≤ 12 months | STCG (111A) | 15% | 20% | Via fund |
| Equity mutual funds | > 12 months | LTCG (112A) | 10% above ₹1L | 12.5% above ₹1.25L | Via fund |
| Unlisted shares | ≤ 24 months | STCG | Slab rates | Slab rates | No |
| Unlisted shares | > 24 months | LTCG | 20% with index. | 12.5% no index. | No |
| Debt mutual funds (bought ≥1 Apr 2023) | Any | STCG | Slab rates | Slab rates | No |
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.
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.
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.
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
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
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
LTCG u/s 112A
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 →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.
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.
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.
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.
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
Frequently Asked Questions
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