How are stock profits taxed in India (LTCG vs STCG)?
Profits on shares are "capital gains". Held under a year it’s short-term (STCG); over a year it’s long-term (LTCG) — taxed differently. Know it before you sell.
When you sell a share or equity fund for more than you paid, the profit is a "capital gain", and it’s taxable in India. How much tax depends mainly on how long you held the investment before selling — the holding period decides whether it’s short-term or long-term.
For listed shares and equity mutual funds, holding for more than 12 months makes the gain "long-term" (LTCG); 12 months or less makes it "short-term" (STCG). The two are taxed at different rates, and LTCG up to a yearly threshold is exempt — the exact rates and limits are set by the government and have changed over the years, so always confirm the current numbers before you sell.
Why it matters: tax can meaningfully change your real return, and timing a sale around the one-year mark can shift it from short-term to long-term treatment. This is general information, not tax advice — for your specific situation, check the latest rules or consult a tax professional.
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Common questions
What is the difference between LTCG and STCG?
It’s the holding period: for listed shares/equity funds, gains on holdings over 12 months are long-term (LTCG); 12 months or less are short-term (STCG). They’re taxed at different rates, with LTCG exempt up to an annual limit.
Do I pay tax even if I don’t withdraw the money?
Capital gains tax is generally triggered when you sell (realise the gain), not while you simply hold. Selling and rebuying resets your holding period, which can affect LTCG vs STCG treatment.