Tax on Capital Gains from Shares Budget 2024 Updated

Updated: 3 June 2026 | Income-tax Act 2025 | Effective from 23 July 2024

After Budget 2024 (effective July 23, 2024): STCG on listed equity shares = 20% (raised from 15%). LTCG on listed equity = 12.5% (raised from 10%) with ₹1.25 lakh annual exemption. Unlisted shares LTCG is now also 12.5% without indexation (was 20% with indexation).

₹1.25L

LTCG exemption per year on listed equity & equity MF
Gains above this threshold taxed at 12.5% — raised from ₹1 lakh by Budget 2024

Capital Gains Tax Rates on Shares: Complete Table (Post Budget 2024)

Asset Type	Holding Period	Type	Tax Rate (Pre 23 Jul 2024)	Tax Rate (Post 23 Jul 2024)	STT Required?
Listed Equity Shares (BSE/NSE)	≤ 12 months	STCG	15%	20%	Yes
Listed Equity Shares (BSE/NSE)	> 12 months	LTCG	10% (above ₹1L)	12.5% (above ₹1.25L)	Yes
Equity-Oriented Mutual Funds	≤ 12 months	STCG	15%	20%	Yes (via fund)
Equity-Oriented Mutual Funds	> 12 months	LTCG	10% (above ₹1L)	12.5% (above ₹1.25L)	Yes (via fund)
Unlisted Equity Shares	≤ 24 months	STCG	Slab rates	Slab rates	No
Unlisted Equity Shares	> 24 months	LTCG	20% with indexation	12.5% without indexation	No
Debt Mutual Funds	Any	STCG/LTCG	Slab rates (post Apr 2023)	Slab rates	No

STCG on Shares: 20% Rate Explained

Short-Term Capital Gains on listed equity shares arise when you sell within 12 months of purchase. The gain is taxed at a flat 20% (plus applicable surcharge and cess), irrespective of your income slab. This rate applies only when STT has been paid on both purchase and sale transactions on a recognised stock exchange.

For example: If you buy shares in January and sell in October of the same year at a profit of ₹50,000, your STCG tax is ₹10,000 (20% of ₹50,000) plus 4% health and education cess = ₹10,400 total.

LTCG on Shares: 12.5% Rate and ₹1.25 Lakh Exemption

Long-Term Capital Gains on listed equity arise when shares are held for more than 12 months. The first ₹1.25 lakh of LTCG per financial year is completely exempt. Only the amount above this threshold is taxed at 12.5% (without the benefit of indexation).

This ₹1.25 lakh exemption is a per-year, per-taxpayer limit — not per transaction. It covers the combined LTCG from all listed equity shares, equity mutual funds, and units of business trusts. LTCG from different assets are pooled together to determine if the ₹1.25L threshold is breached.

Budget 2024 Change: What Shifted on July 23, 2024

Finance Act 2024 (presented July 23, 2024) revised capital gains rates across multiple asset classes. For equity shares specifically:

Transactions on or before July 22, 2024: STCG at 15%, LTCG at 10% with ₹1 lakh exemption.
Transactions on or after July 23, 2024: STCG at 20%, LTCG at 12.5% with ₹1.25 lakh exemption.

If you had transactions in both periods in FY 2024-25, the gains are split and taxed at the respective applicable rates based on the date of sale.

Grandfathering: Shares Held Before January 31, 2018

When LTCG tax on equity was reintroduced by Budget 2018 (effective April 1, 2018), a grandfathering provision protected gains already accumulated. For shares purchased before January 31, 2018, the cost of acquisition is computed as follows:

Step 1: Find the actual purchase price.
Step 2: Find the Fair Market Value (FMV) of the share as on January 31, 2018 (typically the highest quoted price on that date on a recognised stock exchange).
Step 3: The deemed cost = Higher of (Actual Purchase Price) or (Lower of FMV on Jan 31, 2018 vs Actual Sale Price).

In plain terms: any gain that accrued up to January 31, 2018 is effectively exempt — only gains from February 1, 2018 onwards are taxable under LTCG.

Set-Off and Carry Forward of Capital Losses

If you incur a capital loss on shares, it can be set off against capital gains in the same year. Key rules:

Short-Term Capital Loss (STCL): Can be set off against both STCG and LTCG from any capital asset in the same year. Unabsorbed STCL carried forward for 8 years, set off against any capital gains.
Long-Term Capital Loss (LTCL): Can only be set off against LTCG (not STCG, salary, or business income). Unabsorbed LTCL carried forward for 8 years but only against LTCG.
Important: Capital losses cannot be set off against income from salary, business, house property, or other sources under any circumstances.

Frequently Asked Questions

What is the difference between STCG and LTCG on shares?

Short-Term Capital Gains (STCG) arise when listed equity shares or equity-oriented mutual funds are sold within 12 months of purchase. The gain is taxed at 20% (post July 23, 2024 budget change). Long-Term Capital Gains (LTCG) arise when the same assets are held for more than 12 months. LTCG on listed equity exceeding ₹1.25 lakh per financial year is taxed at 12.5% without indexation. For unlisted shares, the holding period to qualify as long-term is 24 months.

What changed for capital gains tax on shares in Budget 2024?

Budget 2024, effective July 23, 2024, made two key changes: (1) STCG rate on listed equity shares and equity mutual funds was raised from 15% to 20%. (2) LTCG rate on listed equity was raised from 10% to 12.5%, but the annual exemption limit was also raised from ₹1 lakh to ₹1.25 lakh. For unlisted shares, the LTCG rate was reduced from 20% (with indexation) to 12.5% (without indexation), aligning with listed equity treatment.

Is STT payment mandatory to get concessional capital gains tax rates on shares?

Yes. The concessional STCG rate of 20% and LTCG rate of 12.5% on listed equity shares apply only when Securities Transaction Tax (STT) has been paid on the transaction — both at the time of purchase and sale. If STT was not paid (for example, off-market transfers or certain exempt transactions), the normal slab rates apply to STCG and 12.5% without indexation or 20% with indexation applies to LTCG on unlisted shares. Equity mutual funds that invest 65%+ in equity also qualify for concessional rates since STT is paid by the fund.

How does grandfathering work for shares held before January 31, 2018?

Grandfathering protects gains accumulated on listed equity shares and equity mutual fund units purchased before January 31, 2018 (when LTCG tax was reintroduced). The cost of acquisition for grandfathered shares is taken as the higher of: (a) the actual purchase price, or (b) the lower of the Fair Market Value (FMV) as on January 31, 2018 or the actual sale price. This means any unrealised gain up to the January 31, 2018 FMV is effectively exempt from LTCG tax.

How can capital losses from shares be set off against other income?

Short-term capital losses (STCL) can be set off against both short-term and long-term capital gains from any asset in the same financial year. Long-term capital losses (LTCL) can only be set off against long-term capital gains — not against STCG or any other income. Both STCL and LTCL that cannot be fully absorbed in the current year can be carried forward for up to 8 assessment years, but only against capital gains of the same type (LTCL against LTCG only). Capital losses cannot be set off against salary, business income, or other heads.

Capital Gains Tax Guide Tax on Mutual Funds STCG vs LTCG Explained ITR-2 for Capital Gains Securities Transaction Tax (STT) Tax on Property Sale Advance Tax on Capital Gains

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