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Equity LTCG tax vs. STCG tax in India is decided first by how long you held the listed shares, then by whether the sale satisfies the special-rate conditions. Listed shares held for less than 12 months are generally short-term capital assets; holdings of 12 months or more are generally long-term. In the current 2026 return-form schedule, the special-rate entries are 20% for qualifying short-term gains and 12.5% for qualifying long-term gains, before any applicable surcharge and health and education cess.
Those percentages are not a complete tax bill. The asset type, STT conditions, transfer date, tax year, residence, losses and whether the activity is treated as investment or business income can change the result. This guide explains the difference between STCG and LTCG tax on shares in India, how the 2024 rate change affects current filings, and what to collect before you calculate or report a gain.
At a glance
| Name | Best for | Key spec | Checked |
|---|---|---|---|
| STCG on listed equity | Shares sold before the 12-month listed-share holding period | 20% special-rate entry; commonly reported under section 111A when qualifying conditions, including the relevant STT requirement, are met | November 2026 |
| LTCG on listed equity | Listed shares held for at least 12 months | 12.5% special-rate entry; section 112A framework and a ₹1.25 lakh aggregate threshold for the 2024 transition rules, subject to the applicable Act and year | November 2026 |
Prices checked November 2026.
Rates shown are from the Income Tax Department’s 2026 return-form schedule. They are headline special-rate entries, not an individualized liability calculation.
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The central difference is the holding period. Under the Income Tax Department’s capital-gains guidance, listed equity shares become long-term when held for 12 months; a shorter holding is generally short-term. The applicable special-rate route then depends on the transaction meeting statutory conditions, including the specified STT treatment for the relevant class of security.
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| Issue | Short-term capital gain (STCG) | Long-term capital gain (LTCG) |
|---|---|---|
| Listed-share holding period | Below 12 months | 12 months or more |
| Current 2026 return-schedule entry | 20% | 12.5% |
| Common statutory route | Section 111A, if the transaction qualifies | Section 112A, if the transaction qualifies |
| STT connection | Confirm the section 111A conditions for the specified STT-paid transaction | Schedule 112A covers specified equity shares, equity-oriented fund units and business-trust units on which STT is paid |
| 2024 transition context | Rate changed to 20% for transfers on or after 23 July 2024 | Rate changed to 12.5% for qualifying gains above the stated threshold from 23 July 2024 |
The comparison is for listed-equity special-rate treatment. Shares in an unlisted company, securities not meeting the relevant conditions, or trading activity assessed as business income may follow different rules. The tax department’s general guidance states that profit or gain from transferring a capital asset is charged under the Capital Gains head; classification must therefore be established before applying a rate.
How does the 12-month holding-period test work?
Count the period between acquisition and transfer using the dates shown in your contract notes, demat records and broker statement. For listed shares, a holding period of 12 months qualifies as long-term under the department’s guidance; selling earlier generally produces a short-term gain.
- Identify each acquisition lot. Record the purchase date and number of shares. Do not assume all shares in a portfolio have the same holding period.
- Identify the transfer date. Use the sale or transfer date reflected in the transaction records, not the date on which you withdraw the money.
- Match lots to the sale. Where shares were bought on several dates, determine which lots were transferred and classify each lot separately where required by the return records.
- Check the asset type. The 12-month rule cited here is for listed equity shares. Equity-oriented fund units, business-trust units and other securities can have their own provisions.
- Retain evidence. Keep contract notes, broker tax reports, demat statements and proof of acquisition cost so the classification can be explained if requested.
A same-day or very short holding can therefore be STCG even when the share price has risen substantially. Conversely, a modest gain after a full year can fall in the LTCG category. The percentage return on the investment does not decide the category; the holding period and statutory conditions do.
What are the current STCG and LTCG rates?
The Income Tax Department’s Notification No. 48/2026 return schedule shows a 20% special-rate entry for qualifying equity STCG and a 12.5% special-rate entry for qualifying equity LTCG. These are the rates a return form uses for the relevant special-rate lines, not a promise that every equity sale is taxed at that percentage.
Your final liability can also reflect applicable surcharge and the health and education cess. It can be affected by eligible capital losses, other income, residency, the chosen tax regime where relevant, and whether the gain is legally within the special provision. A simple multiplication of gain by 20% or 12.5% is therefore only a starting illustration.
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Illustration: why the headline rate is not the final bill
Suppose a qualifying short-term gain is ₹50,000. Applying the 20% schedule entry gives a base calculation of ₹10,000 before any surcharge, cess or loss adjustments. A qualifying long-term gain of ₹50,000 would produce a base calculation of ₹6,250 at 12.5%, again before those adjustments and subject to the applicable threshold and rules.
These examples do not account for your total income or personal circumstances. They are intended to show the rate difference, not to replace a return computation.
When does section 111A apply to equity STCG?
Section 111A is the commonly used special-rate route for qualifying short-term gains on specified securities. The transaction must satisfy the provision’s conditions; the Finance (No. 2) Bill, 2024 amendment specifically concerns specified STT-paid securities and sets the rate at 20% for transfers on or after 23 July 2024.
Do not treat the appearance of a stock sale in a broker statement as automatic proof that section 111A applies. Confirm the security, the nature of the transaction and the required STT treatment. If a condition is missing, the gain may not receive the section 111A rate and may need a different treatment under the law applicable to that year.
When does section 112A apply to equity LTCG?
Schedule 112A is used for qualifying long-term sales of specified equity shares, equity-oriented fund units or business-trust units on which STT is paid. The Income Tax Department’s ITR-2 manual identifies these categories and provides the reporting fields used to disclose the transaction.
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The 2024 Finance Bill set a ₹1.25 lakh aggregate threshold for qualifying section 112A gains and a 12.5% rate for the relevant transfers from 23 July 2024. “Aggregate” matters: the threshold applies across qualifying gains rather than separately to each share or each sale. The threshold and section reference must, however, be checked against the Act governing the transaction and filing year.
For the old-Act transition, the threshold is a useful guide to the 2024 amendment. It should not be silently carried into every later tax year: the Income Tax Department states that the Income-tax Act, 2025 applies to Tax Year 2026–27, while AY 2026–27 relates to the old Act. Verify the new-Act provision before making a definitive threshold claim for transactions governed by Tax Year 2026–27.
How did the 23 July 2024 change affect investors?
The Finance (No. 2) Bill, 2024 changed both headline special rates for transfers on or after 23 July 2024. It raised the qualifying STCG rate under section 111A to 20% and set the qualifying LTCG rate under section 112A at 12.5%, with the ₹1.25 lakh aggregate threshold.
The change created a transition question for transactions in a year containing both pre-23-July and post-23-July transfers. For AY 2026–27, the Income Tax Department’s ITR-2 FAQ says the return no longer asks taxpayers to bifurcate capital gains by transfer date before versus on or after 23 July 2024. That is a reporting instruction for that assessment year; it does not erase the need to preserve transaction dates or prove that the underlying gain qualifies.
For an earlier or later filing year, use the instructions and return schedules for that specific year. A tax calculation copied from a 2024 article may use an obsolete rate, threshold or form field.
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How should I calculate a listed-share gain before filing?
Start with a transaction-level worksheet rather than a single portfolio total. The following sequence mirrors the information requested by the return schedules and the facts needed to test eligibility.
- List every sale. Include the security identifier, quantity, sale date, sale consideration and transaction costs shown in your records.
- Document acquisition. Capture acquisition date, quantity and cost for the shares sold. Corporate actions, gifts, inheritance or transfers can require additional analysis.
- Classify the holding period. Apply the 12-month listed-share threshold to each relevant lot.
- Confirm the security category. Determine whether it is a listed equity share, an equity-oriented fund unit, a business-trust unit or another asset.
- Check STT and other conditions. For a section 111A or 112A claim, verify the applicable STT requirement and any other statutory condition rather than relying only on the broker’s gain figure.
- Separate gains and losses. Keep STCG and LTCG totals distinct, and record eligible losses separately so the applicable set-off and carry-forward rules can be applied correctly.
- Apply the year’s rate and threshold. Use the return schedule for the relevant assessment year or tax year. Do not mix an old-Act section number with a new-Act calculation without checking the transition rules.
- Add the non-rate components. Consider surcharge and health and education cess, along with the rest of your return computation.
The ITR-2 online manual’s Schedule 112A fields are a practical reminder of the core data: sale details, security type, dates, cost, consideration and the relevant STT status. Keep the source documents even if your broker supplies a consolidated tax report, because the consolidated figure may not explain every lot or eligibility condition.
Does the 2026 return form require a pre- and post-23 July split?
For AY 2026–27, the Income Tax Department’s ITR-2 FAQ says the capital-gains reporting requirement to split transfers before 23 July 2024 from transfers on or after that date has been removed. You still need accurate transaction records, because the dates support your classification and may matter for another year, an amended return or a review of the computation.
Do not generalize this form instruction to every tax year. Return schemas change, and Tax Year 2026–27 is governed by the Income-tax Act, 2025 rather than the old Act used for AY 2026–27.
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- Taxpayer status: A resident individual, non-resident, company or other taxpayer can face different computation and reporting rules.
- Investment versus business classification: Frequent trading or facts showing a business may lead to business-income treatment rather than capital gains.
- Asset type: The listed-share framework does not automatically cover unlisted shares, debt instruments or every fund product.
- STT eligibility: A transaction must meet the relevant statutory conditions; paying a charge on one leg of a trade does not by itself prove every requirement.
- Losses: Current-year and brought-forward losses can alter taxable amounts, subject to the set-off and filing rules applicable to you.
- Tax year and law version: The applicable Act, return form and transition provisions control which section, threshold and rate should be used.
- Surcharge and cess: These can increase the amount above the headline percentage.
Because these factors interact, a headline comparison is best used to identify the likely category, not to promise a final payable amount.
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Which records should I keep for an equity-tax calculation?
Keep purchase and sale contract notes, broker ledger and tax reports, demat statements, bank records for consideration, corporate-action notices, and evidence of STT or other transaction charges. Preserve the records by acquisition lot and financial year so you can reconstruct the holding period and cost.
If you are a non-resident, have inherited or gifted shares, hold many lots, or are unsure whether activity is investment or business income, obtain advice from a qualified Indian tax professional before filing. Those facts can require rules that are not captured by the two headline rates.
How we picked the comparison points
This comparison uses the Income Tax Department’s holding-period guidance, the 2026 return-form schedule, the department’s AY 2026–27 FAQ and ITR-2 manual, and the Ministry of Finance’s Finance (No. 2) Bill, 2024. The selection criteria were: a rule that distinguishes STCG from LTCG, a currently published special-rate entry, the statutory eligibility or STT connection, the 2024 transition, and the reporting information a taxpayer needs to assemble.
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Frequently Asked Questions
Is the ₹1.25 lakh exemption available separately for every share I sell?
No. In the 2024 section 112A transition framework, ₹1.25 lakh is an aggregate threshold for qualifying long-term gains, not a separate allowance for each stock or sale. Confirm how the threshold is expressed in the Act and return instructions governing your specific tax year.
Does paying STT automatically make my gain eligible for the special rate?
No. Section 111A and Schedule 112A apply to specified securities and transactions that satisfy their conditions. Check the security type, transaction details and the relevant STT requirement rather than relying on the charge alone.
What if I bought the same shares on several dates?
Classify the lots that were actually transferred using their acquisition dates and supporting records. A single broker-reported profit may combine lots with different holding periods, so reconcile it with contract notes and demat statements.
Can frequent share trading be taxed as business income instead?
Yes, depending on the facts and the taxpayer’s accounting and conduct, trading activity may be treated as business income rather than investment capital gains. That classification can change both the computation and the reporting route, so obtain professional advice when the distinction is uncertain.
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