4.20What is the tax on stock market profits in India?
Time-sensitive: Rates apply to sales on or after 23 July 2024 and continue for FY 2026-27 (checked November 2026). Rules and rates change, so check the official source before acting.
1What is it?
Profits from selling shares are capital gains and are taxed based on how long you held them.
2Why does it exist?
Knowing tax helps you plan. Selling a day before completing 12 months can mean a much higher rate.
3Diagram
| Type | Holding period | Tax rate (listed equity, STT paid) |
|---|---|---|
| Short-term capital gain (STCG) | 12 months or less | 20% (+ cess) |
| Long-term capital gain (LTCG) | More than 12 months | 12.5% (+ cess) on gains above ₹1.25 lakh per financial year |
| Intraday profit | Same day | Speculative business income, taxed at your slab rate |
| F&O profit | Any | Non-speculative business income, taxed at your slab rate |
| Dividends | — | Added to income, taxed at your slab rate |
4Calculation
LTCG tax = (Total LTCG − ₹1,25,000) × 12.5%
- You sold shares held 2 years for a ₹2,00,000 gain.
- Taxable = ₹2,00,000 − ₹1,25,000 = ₹75,000.
- Tax = ₹75,000 × 12.5% = ₹9,375 (+ 4% cess = ₹9,750).
Tax ≈ ₹9,750.
5Quick revision
- ≤12 months: STCG 20%.
- >12 months: LTCG 12.5% above ₹1.25 lakh/yr.
- Intraday and F&O = business income at slab.
- Full details in Level 13.
6Knowledge check
Q1. You held shares 8 months and gained ₹10,000. Tax rate?Show answer
STCG at 20% (+ cess).
Q2. What is the yearly LTCG exemption?Show answer
₹1.25 lakh.
Q3. How is intraday profit taxed?Show answer
As speculative business income at your slab rate.