What is the LTCG tax rate on stocks in 2025-26?

LTCG on listed equity shares is taxed at 12.5% (increased from 10% in Budget 2024). Gains up to ₹1.25 lakh per year are exempt. LTCG applies to shares held for more than 12 months where STT was paid on purchase and sale.

What is STCG tax on stocks?

Short-term capital gains (shares held less than 12 months) on listed equity are taxed at flat 20% (increased from 15% in Budget 2024). This is a special rate and applies regardless of your income tax slab.

What is the ₹1.25 lakh LTCG exemption?

You don't pay LTCG tax on the first ₹1.25 lakh of long-term gains per financial year. This exemption is aggregate across all equity assets (stocks, equity mutual funds). Gains above this threshold are taxed at 12.5%.

What is grandfathering in capital gains?

Grandfathering exempts gains made before 31st Jan 2018. For shares bought before this date, the cost of acquisition is the higher of actual purchase price or fair market value (highest price) on 31st Jan 2018, reducing taxable gains.

Stock Capital Gains Tax Calculator 2026: LTCG STCG

Q: Can I set off capital losses against gains?

Yes. Short-term loss can be set off against both STCG and LTCG. Long-term loss can only be set off against LTCG. Unabsorbed losses can be carried forward for 8 years.

Capital Gains Tax on Stocks (FY 2025-26)

When you sell shares at a profit, the gains are taxed as capital gains. The tax rate depends on how long you held the shares.

LTCG vs STCG on Equity

Aspect	LTCG (Long-Term)	STCG (Short-Term)
Holding Period	> 12 months	≤ 12 months
Tax Rate (FY 2025-26)	12.5%	20%
Previous Rate	10%	15%
Exemption	₹1.25 Lakh/year	No exemption
Indexation	Not available	Not applicable

Budget 2024 Changes (Effective 23 Jul 2024)

LTCG rate increased: From 10% to 12.5%
STCG rate increased: From 15% to 20%
Exemption increased: From ₹1 lakh to ₹1.25 lakh per year
Indexation removed: For all assets except real estate bought before 23 Jul 2024

Grandfathering Provision

For shares acquired before 31st January 2018, gains until that date are exempt from LTCG tax.

                        Cost of Acquisition = Higher of:

                        1. Actual purchase price, OR

                        2. Lower of (FMV on 31 Jan 2018, Sale Price)

LTCG Tax Calculation Formula

                        Capital Gain = Sale Value - Cost of Acquisition

                        Taxable Gain = Capital Gain - ₹1.25 Lakh (exemption)

                        LTCG Tax = Taxable Gain × 12.5% + 4% Cess

Loss Set-Off Rules

Loss Type	Can Set Off Against
Short-term Loss (Equity)	STCG + LTCG (any asset)
Long-term Loss (Equity)	Only LTCG (any asset)
Carry Forward	Up to 8 years

Frequently Asked Questions (FAQs)

Is STT paid counted towards tax?

STT (Securities Transaction Tax) paid on purchase and sale is not deductible from capital gains. It's a separate transaction tax. However, STT payment is a prerequisite for the concessional LTCG/STCG rates. Without STT (like off-market transactions), gains are taxed at slab rates.

How is the ₹1.25 lakh exemption calculated?

The ₹1.25 lakh exemption is aggregate across all LTCG from listed equity shares and equity mutual funds in a financial year. If you have ₹2 lakh LTCG from stocks and ₹1 lakh from mutual funds, total LTCG = ₹3 lakh. Exemption = ₹1.25 lakh. Taxable = ₹1.75 lakh.

What if I have both gains and losses?

First set off losses against gains of the same type. Then short-term loss can be set off against LTCG. Long-term loss can only be set off against LTCG. Remaining loss can be carried forward for 8 years.

Do I need to pay advance tax on capital gains?

Yes, if your estimated tax liability exceeds ₹10,000 in a financial year. Calculate expected gains and pay advance tax by 15th of the month following the quarter when you made the gains.

Are bonus shares and rights shares taxable?

Receiving bonus/rights shares is not taxable. But when you sell them, gains are calculated with acquisition cost as zero for bonus shares (received after 1 April 2001) and subscription price for rights shares.