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Taxation on sale of listed equity shares for FY 2024-25

Understanding the tax implications on sale of equity shares.

Taxable Event: When the listed equity shares are sold.

Capital Gain: When the sale price is more than purchase price.

Capital Gain= Sale Price - Purchase Price - expenses on Sale (brokerage, commission etc)

Capital Loss: When the sale price is less than purchase price.

Long Term Capital Gain: 

Holding Period: Shares are sold after holding them for a period of more than 12 months.

Tax Rate: Long term Captial Gains are exempt upto Rs.125,000 per annum (For FY 2024-25)

Long Term capital gains will be taxed @12.5% with respect to equity shares sold after 23.07.2024.

Long Term capital gains will be taxed @10% with respect to equity shares sold between 01.04.2024 to 22.07.2024.

Note: LTCG will be calculated on gains exceeding Rs.125000 only.

Short Term Capital Gain: 

Holding Period: Shares are sold after holding them for a period of lessthan 12 months.

Tax Rate: 

Short Term capital gains will be taxed @20% with respect to equity shares sold after 23.07.2024.

Short Term capital gains will be taxed @15% with respect to equity shares sold between 01.04.2024 to 22.07.2024.

Payment of tax and filing of return:

If you have sold equity shares during the previous year, you need to calculate the gain or loss from that sale and pay the corresponding taxes. Long-term capital gains (LTCG) from the sale of listed shares above Rs. 1 lakh are taxed at 10%, while short-term capital gains (STCG) are taxed at 15% if sold within 12 months. If the capital gain tax exceeds Rs. 10,000, you must make an advance tax payment to avoid interest under sections 234B and 234C. These gains or losses should be included in your income tax return, and the taxes paid must be reported. However, if you haven't sold any shares and are only holding unrealized gains or losses in your portfolio, no tax needs to be paid since there is no sale transaction yet.

Capital Loss from sale of equity shares:

Losses incurred from the sale of equity shares can be set off against gains from the sale of other equity shares, under certain conditions:

Conditions to Set-Off of Loss:

  1. Long-Term Capital Loss: Losses from the sale of long-term equity shares can only be set off against long-term capital gains from the sale of other long-term equity shares.
  2. Short-Term Capital Loss: Losses from the sale of short-term equity shares can be set off against both short-term capital gains and long-term capital gains from the sale of other equity shares.

Carry Forward of Loss:

  • If any loss remains unutilized after setting it off in the current year, it can be carried forward for up to 8 assessment years.
  • This carried-forward loss can be used to set off against future capital gains from the sale of equity shares in the subsequent 8 assessment years.

Important Note: To carry forward the capital loss, the income tax return must be filed within the due date of the respective assessment year.


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