If you're investing in stocks or mutual funds in India, understanding the capital gains tax rules is crucial. Whether you’re trading for the short term or holding stocks long term, the Income Tax Department will want its share.
Here’s a simple guide to the tax rules on stock gains in India in 2025 — including short-term capital gains (STCG), long-term capital gains (LTCG), exemptions, and expert tips from Vizzve Finance.
1. Short-Term Capital Gains (STCG)
Definition: Profits from selling listed shares or equity mutual funds within 12 months.
Tax Rate: 15% flat (plus cess and surcharge if applicable)
No indexation benefit
Applicable on equity shares & equity-oriented mutual funds
Example:
You buy 100 shares at ₹1,000 each and sell them after 3 months for ₹1,200 =
Profit = ₹20,000 → Tax = ₹3,000 (15%)
2. Long-Term Capital Gains (LTCG)
Definition: Profits from selling listed shares or equity mutual funds after 12 months.
Tax Rate: 10% (on gains above ₹1 lakh per financial year)
No indexation benefit allowed for equity
First ₹1 lakh LTCG is tax-free
Example:
If your total LTCG in a year = ₹1.5 lakh
Taxable = ₹50,000 → Tax = ₹5,000 (10%)
Other Stock-Linked Gains
| Asset Type | Holding Period for LTCG | LTCG Tax Rate | STCG Tax Rate |
|---|---|---|---|
| Listed Shares | > 12 months | 10% (above ₹1L) | 15% |
| Unlisted Shares | > 24 months | 20% (with index.) | Slab-based |
| Debt Mutual Funds | > 36 months | 20% (w/ index.) | Slab-based |
| Equity Mutual Funds | > 12 months | 10% (above ₹1L) | 15% |
| ETFs (equity-based) | > 12 months | 10% | 15% |
How to Reduce Tax on Stock Gains?
✅ Use LTCG Exemption – Sell strategically each year to stay within ₹1L LTCG
✅ Offset Losses – Use short-term or long-term capital losses to reduce tax
✅ Tax Harvesting – Sell and rebuy to reset acquisition cost for LTCG
✅ Invest in ELSS Funds – Tax-saving mutual funds under Section 80C
Are Intraday or Derivatives Gains Taxed Differently?
Yes. Intraday trading and futures/options (F&O) are treated as business income:
Taxed as per your income tax slab
Requires filing ITR-3 with proper accounting
No capital gain rules apply here
Vizzve Tip:
Always keep contract notes, Demat statements, and brokerage invoices for tax filing and audit clarity.
FAQs
Q1. Do I need to pay tax even if I reinvest the profits?
👉 Yes. Tax is payable when the gain is realized, regardless of reinvestment.
Q2. Are Dividends also taxed?
👉 Yes. Dividends are added to your total income and taxed as per your slab.
Q3. Do I need to file ITR if I only have capital gains?
👉 Yes. If your total income (including gains) exceeds the exemption limit, filing ITR is mandatory.
Published on : 25th July
Published by : SMITA
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