Complete Guide to Capital Gains Tax on Shares in India
Capital gains tax on equity shares
When you sell listed shares on NSE or BSE for more than cost of acquisition, capital gains tax applies. India distinguishes short-term (STCG) and long-term (LTCG) based on holding period — 12 months threshold for listed equity and specified equity-oriented mutual funds under current law. Budget 2024 raised STCG rate to 20% and adjusted LTCG to 12.5% above exemption with ₹1.25 lakh annual LTCG exemption on listed equity.
Master Calc's capital gains tax calculator India estimates tax from buy price, sell price, quantity and holding days — helping you plan exits before March 31 and compare net proceeds after STT already paid at sale.
STCG vs LTCG — quick reference
- STCG: holding < 12 months → 20% on gain (listed equity)
- LTCG: holding ≥ 12 months → exempt up to ₹1.25L/year per individual, 12.5% on excess
- Securities Transaction Tax (STT) paid on sale — separate levy, not deductible from gain for individuals typically
- Surcharge and cess apply per income slab on capital gains tax computed
Verify latest Finance Act — rates changed in recent budgets. Use calculator with current defaults and confirm with chartered accountant for large trades.
FIFO and cost basis on Indian equities
Income tax computation generally follows FIFO — shares bought first deemed sold first on partial exit. Your broker average cost display may differ from taxable gain on specific lots. Gather contract notes with dates; match sells to earliest purchases.
Update purchases in Stock Average Calculator for portfolio view; use Capital Gains Calculator with lot dates for tax. Bonus shares have special cost rules — see Bonus Share Calculator then tax guidance from CA.
Worked example: LTCG on ₹5 lakh gain
Purchased 500 shares at ₹800 (₹4 lakh) in April 2023. Sold at ₹1,800 (₹9 lakh) in May 2025 — holding exceeds 12 months. Gross LTCG ₹5 lakh. First ₹1.25 lakh exempt. Taxable ₹3.75 lakh at 12.5% = ₹46,875 plus cess. STCG scenario on same numbers with 8-month hold: 20% on full ₹5 lakh = ₹1 lakh plus cess — dramatic difference motivating longer holding when fundamentals allow.
Spread sales across financial years to use ₹1.25 lakh exemption annually — legal tax planning, not evasion.
Tax-loss harvesting before March 31
Sell loss-making positions to offset gains within set-off rules — STCL offsets STCG/LTCG per schedule; LTCL offsets LTCG. Cannot carry forward without filing ITR by due date. March harvesting common among active investors with taxable gains from profit booking.
Wash sale concept less formal in India than US — still avoid superficial repurchase same day without economic substance; consult CA. Rebuy after planning through Portfolio Rebalancing Calculator if allocation requires equity exposure.
Non-equity assets — different rules
Debt mutual funds, gold ETFs and property follow rules changed from April 2023 for many categories — often taxed at slab rate without indexation benefit that older investors remember. Equity-oriented hybrid above 65% equity allocation may follow equity capital gains rules — check fund classification.
Crypto gains taxed flat 30% under separate section — do not mix with equity LTCG exemption. Income Tax Calculator models salary plus capital gains total liability in old or new regime.
Reporting in ITR
Capital gains reported in Schedule CG — ITR-2 for salaried with capital gains, ITR-3 for business income traders. Brokerage tax P&L statements assist but you remain responsible for accuracy. AIS and Form 26AS show some transactions; reconcile all sells.
Foreign stocks, RSUs and ESOPs have separate chapters — this calculator focuses on Indian listed equity delivery trades. Intraday trading may be classified as business income for frequent traders — CA determination required.
Planning tax-efficient exits
Hold qualifying positions past 12 months when thesis intact — STCG to LTCG rate drop material on large gains. Use exemption bucket yearly for rebalancing trims. Donate appreciated shares to eligible charities under Section 80G where applicable — specialist planning.
Pair exit planning with ROI Calculator net of tax — gross multibagger story may shrink after 12.5% LTCG on lakhs above exemption.
Step-by-step: using Capital Gains Calculator
- Enter purchase price and date (for holding period).
- Enter sale price and quantity sold.
- Select asset type listed equity.
- Review STCG vs LTCG classification.
- Note estimated tax and net proceeds.
- Aggregate multiple sells for annual exemption tracking.
- File figures in ITR Schedule CG with CA review if large.
Common capital gains mistakes
- Assuming average cost equals FIFO tax cost.
- Missing 12-month date by one week — costly STCG.
- Ignoring ₹1.25L exemption planning across years.
- Not setting off losses before March 31.
- Mixing intraday business income with capital gains casually.
Tools: XIRR Calculator, Stocks & Trading calculators, Mutual Fund Calculator.
Disclaimer
Tax rates and holding period rules change with Finance Acts. Calculator provides estimates for education — not chartered accountant advice. Every taxpayer's situation differs (residential status, slab, surcharge). Verify before selling or filing ITR. SEBI registration not applicable to tax tools; consult qualified tax professional for compliance.