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.