Guide to Capital Gains Tax on Shares in India (FY 2025-26)

 Investing in the Indian stock market involves understanding how your profits are taxed. The taxation on shares depends primarily on the type of shares (listed vs. unlisted) and the holding period (how long you kept them before selling). Following the major reforms in 2024, the tax structure has been simplified for the current assessment year.

1. Short-Term Capital Gains (STCG)

If you sell listed equity shares within 12 months of purchase, the resulting profit is treated as a Short-Term Capital Gain.

Following the significant changes introduced in the 2024 Union Budget and maintained through 2025, here is the updated breakdown of how your share investments are taxed.

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1. Short-Term Capital Gains (STCG)

If you sell your equity shares within a specific "short" timeframe, the profit is treated as STCG.

• Holding Period: For listed equity shares, if the holding period is 12 months or less, the gain is considered short-term.

• Tax Rate: STCG on listed shares (where Securities Transaction Tax or STT is paid) is taxed at a flat rate of 20%.

• Exemption: There is no basic exemption limit specifically for STCG. The entire profit is taxable, regardless of the amount, unless your total annual income (including these gains) is below the basic income tax exemption limit (e.g., ₹3 lakh under the New Tax Regime).

Note: For unlisted shares, the holding period to qualify as "short-term" is 24 months or less, and the gains are taxed according to your applicable income tax slab rate.

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2. Long-Term Capital Gains (LTCG)

If you hold your investments for a longer duration, you benefit from a lower tax rate and a specific tax-free threshold.

• Holding Period: For listed equity shares, if held for more than 12 months, the gain is considered long-term.

• Tax Rate: LTCG is taxed at a flat rate of 12.5%.

• Exemption Limit: You enjoy a tax exemption on the first ₹1.25 lakh of aggregate long-term capital gains in a financial year. Tax is only calculated on the amount exceeding this limit.

• Indexation: No indexation benefit is available for listed equity shares. This means you cannot adjust the purchase price for inflation.

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Comparative Summary Table

Feature	Short-Term Capital Gains (STCG)	Long-Term Capital Gains (LTCG)
Holding Period	12 months or less	More than 12 months
Tax Rate	20%	12.5%
Exemption Limit	Nil	₹1.25 Lakh (per year)
Applicable Section	Section 111A	Section 112A
Surcharge & Cess	Surcharge + 4% Health & Education Cess	Surcharge + 4% Health & Education Cess

. Important Rules to Remember

The "Grandfathering" Clause

For shares purchased before January 31, 2018, a "grandfathering" rule applies. This ensures that any gains made up to that date remain tax-exempt. When you sell such shares, the "cost of acquisition" is considered to be the higher of the actual purchase price or the Fair Market Value (FMV) as of January 31, 2018 (provided the FMV is not higher than the actual sale price).

Set-off and Carry Forward

• STCG Losses: Can be set off against both STCG and LTCG.

• LTCG Losses: Can only be set off against LTCG.
• If you cannot set off your losses in the current year, you can carry them forward for up to 8 assessment years.

Securities Transaction Tax (STT)

The specialized tax rates (20% for STCG and 12.5% for LTCG) only apply if the shares are sold on a recognized stock exchange in India and STT has been paid on the transaction.

Title: Missed the 15th December Advance Tax Deadline? Here is How Much Penalty You Have to Pay. Date: December 15, 2025 Category: Income Tax / Compliance

 

Today, December 15th, was the deadline for paying the 3rd installment of Advance Tax for the Financial Year 2025-26.

If you are a freelancer, a business owner, or a salaried individual with significant income from other sources (like capital gains or rent), you were supposed to deposit 75% of your total estimated tax liability by today.

Did you miss it? Don't panic. It happens. However, the Income Tax Department does charge a fee for this delay. Here is a simple breakdown of what happens next and how you can fix it.

1. First, check if you were even liable to pay?

Not everyone has to pay Advance Tax. You are safe if:

• Your total tax liability for the year is less than ₹10,000.

• You are a Senior Citizen (60+ years) and do not have any income from a business or profession.

If you fall into these categories, relax. The 15th December deadline does not apply to you.

2. The Penalty: Understanding Section 234C

If you were liable to pay but missed the deadline, the Income Tax Department levies interest under Section 234C.

• The Rule: You must have paid at least 75% of your total tax by Dec 15th.

• The Interest Rate: 1% per month.

• The Period: For the December installment, interest is calculated for 3 months.

Why 3 months? Even if you pay tomorrow (Dec 16th), the government assumes a deferment for the whole quarter. So, the interest is fixed for this period.

3. Real-Life Example: How much will it cost?

Let’s say your total estimated tax for the year is ₹1,00,000.

• Target: By Dec 15, you should have paid 75% = ₹75,000.

• Scenario: You forgot to pay anything. You paid ₹0.

• Shortfall: ₹75,000.

The Calculation: Interest = Shortfall × 1% × 3 Months Interest = ₹75,000 × 1% × 3 Interest Payable = ₹2,250

So, missing today's deadline effectively cost you ₹2,250 extra.

4. What should you do now?

If you missed the deadline, here is my advice as a Tax Consultant:

1. Pay Immediately: Even though Section 234C interest (for 3 months) is now unavoidable for the December quarter, paying the tax now will save you from further interest under Section 234B which kicks in after March 31st.

2. Recalculate: December is a good time to re-check your estimated income. If your profit is lower than expected, your tax liability decreases, and so does the interest.

3. Prepare for March: The final installment (100% of tax) is due on March 15th. Mark your calendar now so you don't pay interest twice.

Conclusion

Paying taxes on time isn't just a duty; it’s a smart financial habit. The interest penalties under sections 234A, 234B, and 234C can add up to a significant amount if ignored.

Confused about the Challan? If you want to pay your tax now but don't know how to calculate the exact amount or which Challan to use (ITNS 280), feel free to contact me. I can help you file it correctly to minimize your penalties.

Contact:7005428094

Sourav Saha | Tax Consultant