Capital Gains on Securities

We have tried to create a simple summary for the capital gains on commonly held securities. Bear in mind that this is just for reference and there may be additional conditions/ provisions for each asset type.

For tax implications on foreign stocks, click here

Points to Remember:

  • STT paid on sale of shares is not an allowable deduction.

  • Long term capital gains tax exemption benefit is limited to Equity shares and Equity oriented mutual funds.

  • Capital gains on shares is calculated on the first-in-first out basis (FIFO).

Frequently asked questions

What is the tax liability on Capital Gains arising on sale of shares and securities in India?


The tax liability on capital gains on sale of shares and securities shall be as under * Plus surcharge (if applicable) plus education cess @ 2% plus Secondary Higher Education Cess @ 2%




Ms. R has sold her shares in April, 2017 and had purchased the said shares in February 2010, such shares are sold and purchased on recognized stock exchange and STT is paid both the time. What will be the taxation on gains?


Since the period of holding of the shares is more than 12 months, the capital gain shall be treated as long term capital asset. As per the provisions of the Act, LTCG on sale of shares, listed on recognized stock exchange and on which STT is paid is exempt




Will the answer differ if STT is not paid on such Purchase of shares?


Yes, the LTCG on sale of shares on which STT is not paid at the time of acquisition of shares is taxable, subject to certain exceptions.





 

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