🇮🇳 India Capital Gains Tax Guide

India taxes capital gains on equity based on the holding period, with a distinction between Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG). The rules changed significantly in the July 2024 budget.

How Capital Gains Tax Works in India

For listed equity shares, a holding period of 12 months defines the boundary. Gains realized within 12 months are STCG. Gains realized after 12 months are LTCG. Securities Transaction Tax (STT) must be paid for these rates to apply.

•Short-Term Rate (STCG): 20% on all profits
•Long-Term Rate (LTCG): 12.5% on profits exceeding ₹1.25 Lakh/year
•Exemption Rule: First ₹1.25 Lakh of LTCG in a financial year is tax-free
•Set-off Rules: Short-term losses can offset both STCG and LTCG; Long-term losses can only offset LTCG

Example: Capital Gains Tax in India

Scenario

You invested ₹5,00,000 in Tata Motors and sold it for ₹6,50,000.

Purchase Price₹5,00,000
Sale Price₹6,50,000
Profit₹1,50,000
Tax if STCG (20%)₹30,000
Tax if LTCG (12.5% over ₹1.25L)₹3,125
LTCG calculation: ₹1.5L Profit - ₹1.25L Exemption = ₹25,000 taxable. 12.5% of ₹25,000 is ₹3,125. Holding longer saved ₹26,875.

India Tax Optimization Strategies

Tax Harvesting (LTCG)

Sell and rebuy stocks annually to utilize the ₹1.25 Lakh tax-free limit, resetting your cost basis (Grandfathering/Harvesting).

Loss Set-off

Book losses purely to offset realized gains before March 31st. Short-term losses are more valuable as they cover both STCG and LTCG.

Carry Forward Losses

File your ITR on time to carry forward unadjusted losses for up to 8 years.

Tax Optimization Tools

Capital Gains Calculator
Calculate exact tax liability
Portfolio Risk Checker
Assess tax-adjusted returns
Disclaimer: This is general information only, not tax advice. Tax laws change frequently and vary by individual circumstances. Consult a qualified tax professional in India for your specific situation.