| Asset Type | Short Term | Long Term | Holding Period |
|---|---|---|---|
| Equity Shares | As per tax slab | 10% (above ₹1L) | 1 year |
| Mutual Funds (Equity) | As per tax slab | 10% (above ₹1L) | 1 year |
| Debt Mutual Funds | As per tax slab | 20% (with indexation) | 3 years |
| Bonds | As per tax slab | 20% (with indexation) | 1 year |
Investing in stocks and mutual funds is increasingly popular in India, but many investors don't understand the tax implications until they sell their investments. The tax you pay depends on how long you held the stocks or funds, whether you traded frequently or held for long term, and the type of asset (equity vs debt). Understanding these rules helps you plan your taxes better and avoid surprises during ITR filing.
For FY 2025-26, equity investments (stocks, equity mutual funds) have different tax treatment: Long-term capital gains (held more than 12 months) are taxed at 10% above ₹1 lakh exemption. Short-term gains (sold within 12 months) are taxed at 15%. Also, there's a Security Transaction Tax (STT) of 0.025% when you sell shares. Debt mutual funds work differently - long-term gains (held more than 36 months) are taxed at 20% with indexation benefit, while short-term gains are taxed at income tax slab rate.
Our stock market tax calculator helps you calculate the exact tax liability on your share trading and mutual fund investments. Whether you've made money from trading stocks, redeemed mutual fund units, or got dividends, all of this needs to be declared in your ITR. If your total long-term capital gains from equity is less than ₹1 lakh, you pay zero tax. Above ₹1 lakh, only the excess amount is taxed at 10%. This ₹1 lakh exemption resets every financial year.
Stock market profits impact your overall tax calculation. Use our income tax calculator to see how capital gains affect your total tax liability. If you've made significant profits, you might need to pay advance tax quarterly to avoid interest penalties. Remember, losses from stocks can be carried forward to set off against future gains, which is a useful tax planning tool.
For detailed capital gains tax rules and exemptions, visit the Income Tax Department's capital gains page at capital gains FAQ which explains STT, tax rates, exemptions, and how to report stock market transactions in your ITR.
STCG (Short Term Capital Gains) is taxed as per your income tax slab, while LTCG (Long Term Capital Gains) has special rates - 10% for equity (above ₹1L exemption) and 20% with indexation for debt funds.
Yes, there's an exemption of ₹1 lakh per year on LTCG from equity shares and equity mutual funds. Only gains above ₹1 lakh are taxable at 10%.
STCL can be set off against STCG and LTCG in the same year. LTCG can only be set off against LTCG. Unabsorbed losses can be carried forward for 8 years.
STT (Securities Transaction Tax) is levied on sale transactions. For equity shares, it's 0.1% of sale value. For mutual funds, it's 0.001% of sale value.
Yes, if your estimated tax liability (including capital gains tax) exceeds ₹10,000, you need to pay advance tax in installments during the financial year.