Any Profit or Gain
that arises from the sale of a ‘capital asset’ comes under the category
‘Income’, hence we need to pay tax for that amount in the year in which the
transfer of the Capital Asset takes place. This is called Capital Gains Tax.
The two types of Capital Gains are Short-Term Capital Gains Tax (STCG) and
Long-Term Capital Gains Tax (LTCG).
Short-Term
Capital Gains (STCG) Tax on Equity Investments
Stock market investments that mature, are redeemed or are sold in a span
of less than 12 months are classified as short term. Short-term capital gains
(STCG) from equity investments are subject to short-term capital gains tax in
India.
· Tax Rate
for STCG
If you sell listed equity shares or equity‑oriented mutual funds on
or after 23 July 2024, the STCG tax rate is 20% (plus applicable
cess and surcharge) for STT‑paid transactions.
For sales made before 23 July 2024, the STCG rate applicable was 15%.
Long-Term
Capital Gains (LTCG) Tax on Equity Investments
A Long-Term Capital Gain is profit generated from sale of any qualifying
investment option that has been owned by an investor for more than 12 months at
the time of sale of the asset. It is determined by the difference in value of
sale price and purchase price of assets owned for over 12 months.
For
listed equity shares, equity‐oriented mutual funds and similar “equity style”
assets (with STT paid) sold on or
after 23 July 2024: Gains up to ₹ 1.25 lakh in a financial year
are exempt. Gains beyond that
are taxed at 12.5% (without indexation
benefit).
For
other assets (like immovable property, unlisted shares, etc.), if sold on or
after 23 July 2024: The tax is 12.5% without indexation benefit,
with some specific options in the case of land/building for individuals (they
may choose 12.5% without indexation, or 20% with indexation).