Table of Contents
Introduction
1️⃣ What Are Capital Gains?
2️⃣ New Tax Rules for 2025 – STCG & LTCG
• Equity Shares & Equity Mutual Funds
• Intraday Equity Trading
• Futures & Options (F&O)
• Commodity Trading
3️⃣ Examples & Calculations
4️⃣ Important Points to Remember
5️⃣ Final Takeaway FAQs
If you make money from the Share Market — whether it’s from Stocks, Options, Futures, or Commodity Trading — you should know how much tax applies under the 2025 rules. Many traders lose a big chunk of profits simply due to incorrect tax planning. This guide explains STCG and LTCG in plain English with worked examples.
1️⃣ What Are Capital Gains?
Whenever you sell a share, mutual fund, or any other security at a profit, it is called a Capital Gain.
- Short Term Capital Gain (STCG): You sell within 1 year of purchase.
- Long Term Capital Gain (LTCG): You sell after holding for more than 1 year.
2️⃣ New Tax Rules for 2025 – STCG & LTCG
STCG (< 1 year): 15% (if STT is paid)
LTCG (> 1 year): First ₹1,00,000 tax-free; 10% on the amount above
Treatment: Business Income
Tax: As per the income tax slab rate
Treatment: Business Income
Tax: As per the income tax slab rate
Treatment: Business Income
Tax: As per the income tax slab rate
📌 Equity Shares & Equity Mutual Funds
- STCG (less than 1 year) → 15% (if Securities Transaction Tax – STT is paid).
- LTCG (more than 1 year) → First ₹1 lakh tax-free; above that 10%.
📌 Intraday Equity Trading
- Profits are treated as Business Income.
- Taxed as per your income tax slab (5%, 20%, 30%, etc.).
📌 Futures & Options (F&O) Trading
- Classified as Business Income (speculative/non-speculative per rules).
- Tax applies according to your slab rate.
📌 Commodity Trading
- Treated similarly to F&O: Business Income.
- Taxed per your slab rate.
3️⃣ Examples & Calculations
| Case | Scenario | Profit | Tax Rate | Tax Amount |
|---|---|---|---|---|
| Example 1 – STCG on Shares | 100 shares @ ₹200 → sold @ ₹250 within 6 months | ₹5,000 | 15% | ₹750 |
| Example 2 – LTCG on Shares | 200 shares @ ₹300 → sold @ ₹400 after 2 years | ₹20,000 | 10% (above ₹1L only) | ₹0 (under ₹1L exemption) |
| Example 3 – Intraday | Same-day profit; total income ₹8,00,000 | ₹40,000 | 20% (slab) | ₹8,000 |
| Example 4 – F&O | Nifty Futures profit; total income ₹12,00,000 | ₹1,50,000 | 30% (slab) | ₹45,000 |
| Example 5 – Commodity | Gold MCX Futures; 20% slab | ₹80,000 | 20% (slab) | ₹16,000 |
4️⃣ Important Points to Remember
- To use the 15% STCG rate, ensure STT is paid.
- For F&O and commodities, compute turnover correctly to assess audit needs.
- You can set off losses against gains as per the Income Tax rules.
- Keep detailed broker statements and contract notes for ITR filing.
5️⃣ Final Takeaway
Understanding Share Market taxation in 2025 is as crucial as picking the right trades. Whether you are a long-term investor or an active trader, knowing how STCG, LTCG, and Business Income work helps you keep more of your profits. Plan ahead, track your records, and file your ITR on time.
Frequently Asked Questions (FAQs)
Q1. Is share market profit taxable in India?
Yes. Profits from shares, F&O, and commodities are taxable under STCG, LTCG, or Business Income rules, depending on the nature of the transaction.
Q2. How is intraday trading taxed?
Intraday equity trading profits are treated as Business Income and taxed according to your income slab rate.
Q3. How much LTCG is tax‑free?
Up to ₹1,00,000 of LTCG from equity shares and equity mutual funds is tax‑free in a financial year. Amount above this is taxed at 10%.
Q4. Can I adjust my share market losses?
Yes. You may set off eligible capital losses against capital gains as per Income Tax provisions, subject to timelines and carry‑forward rules.
Pro tip: Bookmark this page. Before you sell or square off, skim the rates and examples above to estimate your post‑tax profit.
