How are gains on my listed shares taxed in India?

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

Short answerOn listed Indian shares (with STT paid), short-term gains (held up to 12 months) are taxed at 20% under Section 111A, and long-term gains (held over 12 months) at 12.5% on the amount above ₹1.25 lakh a year under Section 112A. For NRIs, TDS is deducted on these gains.

Short-term versus long-term

For listed shares on which STT is paid, the holding-period line is 12 months. Sell within 12 months and the gain is short-term, taxed at 20% (Section 111A, from 23 July 2024). Hold longer and it is long-term, taxed at 12.5% (Section 112A) on the amount above a ₹1.25 lakh annual exemption. Rates and the exemption can change — confirm per the Finance Act.

Grandfathering for older holdings

For shares bought before 1 February 2018, gains are grandfathered: your cost is taken as the higher of actual cost and the fair market value on 31 January 2018, so the pre-2018 appreciation is protected. This often reduces the taxable long-term gain substantially on long-held shares.

A worked example

Example: you sell shares after three years with a ₹3 lakh long-term gain — tax applies on ₹1.75 lakh (after the ₹1.25 lakh shield) at 12.5%, about ₹21,875. As an NRI, TDS is deducted at redemption, recoverable by filing if excessive. Dividends on the same shares are taxed separately. Our NRI tax service can compute and file it.

NRI Taxation

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This answer is general information for NRIs, 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.