Two kinds of gain, decided by holding period
When you sell listed shares for more than you paid, the profit is a capital gain. How long you held the shares decides whether it is a short-term or a long-term gain. The two are taxed at different rates, and long-term gains on listed equity also have a yearly exemption limit.
The holding-period cut-off, the rates and the exemption limit have all been changed by Budgets in the past. Always check the current numbers on the Income Tax Department's website before you rely on any figure, including those in calculators.
How a gain is worked out
Gain = sale value − purchase value − transfer costs such as brokerage. If you bought the same share in several lots at different prices, each lot has its own purchase date and price, and the lot you sold determines the gain. The Stock Average Calculator helps you track the blended cost, and the Stock Profit/Loss Calculator shows a single trade.
Intraday trades, F&O and delivery-based trades are treated differently. Intraday and F&O profits are generally not capital gains. If you trade often, speak to a tax professional about how your income is classified.
A simple way to think about the calculation
Suppose you sell shares you held for well over a year, and your total long-term gain for the year is ₹2,00,000. The exemption limit is deducted first, and the tax rate applies only to the remainder. If you sold shares you held for a few weeks, the short-term rate applies to the whole gain, with no exemption.
Enter your gain, the holding period and the rates from the official source into the Capital Gains Tax Calculator to estimate the figure, then keep the working with your records.
Losses and how they are used
Capital losses can usually be set off against gains, and unused losses can be carried forward for a number of years if you file your return on time. The rules about which loss can offset which gain are specific, so check them before you plan trades around them.
Do not sell something only to book a loss unless you would have sold it anyway. Tax is one input into the decision, not the only one.
Records worth keeping
Keep your contract notes, your broker's capital gains statement and your own list of purchase dates and prices. For bonus shares, splits and mergers, the cost and holding period can change, so note those events too. Good records make filing much easier and protect you if the department asks questions.
Frequently asked questions
How do I know if a gain is short-term or long-term?
It depends on how long you held the shares before selling. The cut-off for listed equity is set by law and can change, so check the current rule.
Does the calculator include brokerage?
Brokerage and other charges reduce your gain. Use the Brokerage & Charges Calculator to estimate them, then deduct them in your working.
Is this tax advice?
No. It is general information to help you plan. A qualified tax professional can advise on your situation.