Tax Liability on Selling Shares

Long-Term Capital Gains/Loss

If the equity shares are sold after 12 months of purchase, an individual makes a long-term capital gain (LTCG) or incurs a long-term capital loss (LTCL). 

An individual makes a short- term capital gain (STCG) or incurs a short-term capital loss (STCL) when shares are sold within 365 days of purchase.

Short-Term Capital Gains/Loss

Taxation of LTCG

An individual making long-term capital gains of over Rs  1 lakh has to pay LTCG tax of 10% plus the applicable cess.

Indexation Benefits 

Starting April 1, 2018, indexation benefits earned from selling shares are unavailable on  LTCG.

Regardless of the tax slab, short-term capital gains earned from selling shares are taxable at 15%.

Taxation of STCG

Short-Term Capital  Loss

Short-term capital losses, if filed within time, can be carried forward for 8 consecutive years and set off against any gains made in those years.

Long-term capital loss can be set off only against LTCG. Short-term capital loss can be set off against both LTCG and STCG.

Long-Term Capital  Loss

For stocks held before February 2018, only the profits made from February 1, 2018, are taxed, & the previous gains are exempted.

The Grandfathering  Rule

Earn 9 - 11%  Fixed Returns

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