How do I calculate capital gains on shares?

CA Vijay R Singh, FCA
Chartered Accountant · ICAI M.No. 153926 · FRN 136869W

Short answerCapital gain on shares is the sale price minus your cost (plus charges). For listed shares with STT, gains held up to 12 months are short-term at 20%; held over 12 months, long-term at 12.5% above ₹1.25 lakh a year. Shares bought before 1 February 2018 get grandfathering of their 31 January 2018 value.

The basic computation

The gain is sale consideration minus cost of acquisition (and minus brokerage/charges). For listed shares on which STT is paid, the holding-period line is 12 months: short-term (≤12 months) at 20% under Section 111A; long-term (>12 months) at 12.5% under Section 112A on the amount above a ₹1.25 lakh yearly exemption.

Grandfathering for pre-2018 shares

For shares acquired before 1 February 2018, the cost is taken as the higher of actual cost and the fair market value on 31 January 2018 (capped at the sale price). This shields the gains that accrued before LTCG on equity was introduced, and matters a lot for long-held shares. Confirm current rates and the exemption per the Finance Act.

A worked example

Example: you bought shares in 2016 for ₹2 lakh; their 31 January 2018 value was ₹5 lakh; you sell in 2026 for ₹9 lakh. Your cost for the long-term gain is taken as ₹5 lakh, so the gain is ₹4 lakh — tax on ₹2.75 lakh (after the ₹1.25 lakh shield) at 12.5%. You can also set off losses against this. Our team can compute it from your broker statement.

Income Tax

← Back to all questions

Talk to CA Vijay R Singh

Need your share capital gains computed correctly? You can message him directly, or book a short call to talk through your situation.

Book a 15-minute call
Message on WhatsApp
Email your query

This answer is general information for taxpayers, not tax advice. Tax rates, thresholds and forms change with each Finance Act — please confirm the current position for your own facts, or speak to us, before acting.