Selling stocks or mutual funds for profit triggers capital gains tax in India. Whether you pay STCG or LTCG depends on holding period and asset type. Planning sales before year-end can save tax.
Listed equity shares & equity mutual funds
- STCG — holding below 12 months; taxed at applicable rate (check current rules)
- LTCG — holding 12 months or more; concessional rate on gains above exemption limit
- Securities Transaction Tax (STT) paid affects eligibility for certain rates
How gain is calculated
Capital Gain = Sale Price − Purchase Price − Expenses (brokerage etc.)
For mutual funds, use NAV at purchase and sale dates. For multiple buys, use FIFO or average cost — keep contract notes and statements.
Debt mutual funds & other assets
Holding period and tax rates differ from equity. Debt fund rules have changed in recent years — always verify current Finance Act provisions.
Tax-saving tips (legal)
- Hold equity investments beyond 12 months for LTCG treatment where applicable
- Harvest losses to offset gains (tax loss harvesting) within rules
- Use ₹1.5 lakh 80C and other deductions to manage overall tax slab
- File ITR with correct schedule for capital gains
Example
Bought shares for ₹2 lakh, sold for ₹3 lakh after 18 months. Gain = ₹1 lakh. Tax depends on LTCG rules and exemption available in that year — use calculator for estimate.
Use Master Calc capital gains tools
Estimate tax with our Capital Gains Calculator. Track average buy price with Stock Average Calculator and overall tax with Income Tax Calculator — free on Master Calc.
FAQ
Is LTCG tax-free up to some limit? Equity LTCG had exemption threshold — verify current year's limit and rate in tax law.
Are SIP units taxed separately? Yes, each SIP instalment has its own purchase date and holding period.
Disclaimer: Tax laws change frequently. This is general information, not tax advice.