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LTCG and STCG tax on shares in India (2026 rates)
Long-term capital gains on listed Indian equity are taxed at 12.5% above a 1.25 lakh annual exemption, and short-term gains at 20%, under the rules effective 23 July 2024.
In one line
On listed Indian shares, long-term capital gains (held over 12 months) are taxed at 12.5% on gains above 1.25 lakh rupees a year, and short-term gains (held 12 months or less) at 20%, under the Finance (No. 2) Act 2024 rates that took effect on 23 July 2024.
BazaarBaaziSource & method
The two buckets, and the 12-month line
For listed equity shares and equity-oriented mutual funds where STT is paid, the holding-period line is 12 months. Sell on or before 12 months and the gain is short-term, taxed under Section 111A. Hold beyond 12 months and it is long-term, taxed under Section 112A. The clock runs from the date of purchase to the date of sale.
Short-term capital gains on this listed-equity bucket are taxed at a flat 20% as of 2026, up from 15% before 23 July 2024. Long-term capital gains are taxed at 12.5%, but only on the portion above a 1.25 lakh rupee exemption in a financial year, which was raised from the earlier 1 lakh.
What the 2024 change actually did
The Finance (No. 2) Act 2024 reset the equity capital-gains regime with effect from 23 July 2024. It lifted the short-term rate from 15% to 20%, lifted the long-term rate from 10% to 12.5%, and raised the long-term exemption from 1 lakh to 1.25 lakh. Indexation, which never applied to listed equity anyway, was removed across most other asset classes too.
A worked example keeps it concrete. Book 3 lakh of long-term gains in a year, subtract the 1.25 lakh exemption, and 1.75 lakh is taxable at 12.5%, a tax of 21,875 rupees plus applicable cess. The same 3 lakh as a short-term gain is taxed at 20%, or 60,000 rupees plus cess, which is why the holding period matters so much.
FAQ4 reader questions · AEO-eligible
Common questions on ltcg and stcg tax.
What is the LTCG tax rate on shares in India?
Long-term capital gains on listed equity held over 12 months are taxed at 12.5% on the amount above a 1.25 lakh rupee annual exemption, as of 2026 under the rules effective 23 July 2024.
What is the STCG tax rate on shares?
Short-term capital gains on listed equity held for 12 months or less are taxed at a flat 20% under Section 111A, raised from 15% on 23 July 2024.
Is the 1.25 lakh exemption per year or per trade?
It is per financial year and applies to your aggregate long-term equity gains, not to each trade. Only the long-term gain above 1.25 lakh in a year is taxed at 12.5%.
Does the holding period start from purchase or allotment?
For listed shares the holding period runs from the date of acquisition to the date of sale. Cross 12 months and the gain qualifies as long-term.
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