Tax
Equity shares: STCG, LTCG and the ₹1.25 lakh line
Twelve months, 20% short-term, 12.5% long-term above ₹1,25,000 — and why the exemption is shared.
Direct equity is the one asset class with its own capital-gains sections rather than the general rule. Since 23 July 2024 a listed share held over twelve months is long-term, the long-term rate is 12.5% on gains above a ₹1,25,000 exemption for the year, and a short-term sale pays 20% — both conditional on securities transaction tax having been paid, which is what makes the sale a 'specified' one. Listed bonus and rights shares, ESOP sales and off-market transfers each bend the rule, so this guide keeps the definitional lines in view.
Rates on this page
| Asset | Long-term after | Short-term | Long-term |
|---|---|---|---|
| Equity shares / equity funds (STT paid) | 12 months | 20% | 12.5% above ₹1,25,000 |
| Unlisted shares | 24 months | Your slab | 12.5% |
| Other capital asset | 24 months | Your slab | 12.5% |
The twelve-month line, and what crosses it
Holding period is counted from the date the shares are credited to your demat account to the date of transfer. Over twelve months and the gain is long-term (section 112A) at 12.5% above the ₹1,25,000 exemption; twelve months or less and it is short-term (section 111A) at 20%. Both rates apply only where STT was paid on the transfer — an off-market sale or a transfer to a family member is outside section 111A/112A and falls back to slab or the general 12.5% long-term rule.
The ₹1,25,000 exemption is a yearly bucket, not a per-trade allowance
Section 112A exempts the first ₹1,25,000 of long-term gains across all specified assets in the financial year — shares, equity-oriented funds and business-trust units together. Sell two holdings at a ₹1 lakh gain each and the exemption absorbs the first, not both. This is also why the exemption cannot be claimed on unlisted shares or on foreign shares: they never enter section 112A.
What sits on top of the rate
Both rates are base rates. A 4% health-and-education cess applies to the tax, and a surcharge applies at higher income — including on capital gains, with the section 112A long-term rate capped at 15% surcharge. The calculators here apply cess and stop there, saying so, rather than guessing your total income.
The set-off rules that decide the net number
A short-term capital loss can be set off against any capital gain (short or long), while a long-term loss can only be set off against long-term gains — and both can be carried forward for eight years if the return is filed on time. Sections 80C to 80U cannot be set against gains taxed at the concessional 15%/20% short-term rate, so a tax-saving investment never offsets an equity trading gain.
Compute STCG or LTCG on a share sale →
Questions on equity shares
Is the ₹1,25,000 long-term exemption per share or per year?
Per year, per taxpayer, and shared across every section 112A asset — listed shares, equity-oriented mutual funds and business-trust units. The first ₹1,25,000 of long-term gains in the financial year is exempt; everything above it is taxed at 12.5%.
I sold after 11 months and 20 days. Is that long-term?
No. The test is twelve months from the date of acquisition (the credit date in your demat account) to the date of transfer. A day short is a short-term gain at 20%. The calculators take the holding period in months, so enter 12 or more only when the holding is genuinely past twelve months.
Can I avoid the tax by selling and buying the same shares back?
Selling realises the gain and the tax with it — buying back resets your cost and your holding period, it does not undo the transaction. The legitimate version of this idea is using the ₹1,25,000 exemption to book gains you would otherwise pay tax on later, which is a planning decision for your own position, not a rule in this tool.
Sources
Reviewed 25 Sept 2026. Tax rates are set by statute and change with the annual Finance Act, so the Income Tax Department’s own pages are the authority — every claim here links to one, with the snapshot date noted where the department’s site refused an automated read.
- Income Tax Department — Capital Gain (Tax Guide)Two holding periods since 23 Jul 2024 (12 months listed securities, 24 months other assets); section 111A short-term rate of 20% on STT-paid equity shares, equity-oriented funds and business-trust units; section 112A long-term rate of 12.5% on the same assets above ₹1,25,000; the uniform 12.5% long-term rate without indexation; the deemed short-term list (depreciable assets, market-linked debentures, specified mutual funds, unlisted bonds and unlisted debentures).Read: Internet Archive snapshot of 14 May 2026 (the department's live pages return 403 to this host).
- CBDT — FAQs on the new capital-gains regime (via PIB, 24 Jul 2024, PRID 2036604)Effective 23 Jul 2024; the two holding periods; gold's long-term test reduced from 36 to 24 months; STT-paid listed-equity short-term rate raised from 15% to 20% and the long-term rate from 10% to 12.5%; the section 112A exemption raised from ₹1 lakh to ₹1,25,000 from FY 2024-25 onwards; other long-term gains at 12.5% without indexation; rollover benefits unchanged (section 54EC bonds up to ₹50 lakh).Read: Live fetch, 25 Sep 2026.
- Finance (No. 2) Act, 2024 — as summarised in the Income Tax Department's capital-gains guidanceRemoval of indexation for transfers on or after 23 Jul 2024 with the long-term rate set at 12.5%; the grandfathering option for resident individuals and HUFs on land or a building acquired before 23 Jul 2024; the section 50AA amendment deeming unlisted bond and debenture gains short-term.Read: Internet Archive snapshot of 14 May 2026.