Capital gains tax on shares: short-term, long-term and set-off

A capital gain is the profit when you sell something for more than it cost you. The tax is split in two by how long you held it. A short-term capital gain is a profit on something held for a shorter time, and a long-term capital gain is a profit on something held for longer. The split point differs by asset, and long-term gains are usually taxed more lightly.

The table gives the rules in force on 30 Oct 2026 for each kind of asset in our data. Slab rates means the gain is added to your other income and taxed at your normal income tax rate. The yearly exemption is the amount of long-term gain you can make in a financial year (1 April to 31 March) without paying tax on it.

For listed shares and equity mutual funds, short-term gains are taxed at 20% and long-term gains at 12.5% on the part above ₹1,25,000 in a year. The exemption is one amount for the whole year, across all your equity and equity-fund sales.

On top of the tax, a health and education cess of 4% is added, and a surcharge applies at higher incomes. The rate for listed shares was last changed on 23 Jul 2024.

For listed shares the holding period is 12 months. You count from the day you bought. A gain is long-term only if you held for longer than that many months, so exactly 12 months is still short-term. For example, shares bought on 15 Mar 2025 become long-term only if sold after 15 Mar 2026.

Other assets have other periods, shown in the table above. Debt mutual funds bought on or after 1 Apr 2023 have no long-term split at all: their gains are taxed at slab rates whatever the holding period.

Set-off means using a loss to reduce a gain so that you pay tax on the net amount. As our tax engine applies it:

• A short-term loss can be set off against short-term and long-term gains.
• A long-term loss can be set off only against long-term gains.
• Capital losses do not reduce other income such as salary.
• A loss you cannot use this year can be carried forward for 8 financial years, and the tax calculator warns that this works only if the return is filed on time.
• Crypto is different: losses on it cannot be set off against anything or carried forward.

Source for the set-off rules: Income-tax Act 2025 ss.111, 112 and 113 (Income-tax Act 1961 ss.74, 72 and 73), as implemented in the RupeeScope tax engine. We have not yet re-read the statute text for this page, so check the current provision before relying on it.

Two made-up share sales in the financial year 2026-27, worked out by the same engine as the capital gains tax calculator under the new tax regime, for someone with ₹18,00,000 of other income (salary, so the standard deduction applies).

How the tax is built up

The extra tax caused by these two sales is ₹13,546.00, about 6.1% of the net gain of ₹2,22,000. Change the inputs in the calculator to see your own.

Open the capital gains tax calculator

• Sales without STT paid, such as some off-market transfers.
• Taxpayers aged 60 or above, whose slabs differ.
• Debt fund units bought before 1 Apr 2023, which follow older rules.
• Share buy-backs. Budget 2026-27 (Finance Bill 2026) proposed no change to ss.196/197/198 rates, the 12-month period or the 1,25,000 exemption; its capital-gains changes were share buy-back taxation and the Sovereign Gold Bond exemption. Buy-backs are not supported by this engine.
• Gold bonds sold before maturity, and other special cases.

For your own return, speak to a chartered accountant.