How are capital gains tax rates applied to stocks in India?

Capital gains tax in India applies to profits earned from selling stocks. The tax rate is based on the holding period of the shares.

1. Short-Term vs. Long-Term Capital Gains Tax

1. Short-Term Capital Gains (STCG): If stocks are sold within one year, the profit is taxed at 15%.

2. Long-Term Capital Gains (LTCG): If stocks are held for more than a year, gains above ₹1 lakh are taxed at 10% (without indexation benefits).

2. Tax on Dividend Income

Dividend income from stocks is taxed at the investor’s applicable income tax slab rate.

3. How to Save Taxes on Stock Market Gains?

• Use the ₹1 lakh LTCG exemption by planning stock sales wisely.
• Set off capital losses against capital gains.
• Invest in tax-saving instruments like ELSS mutual funds.

4. Conclusion

Capital gains tax depends on the duration of stock holding. Understanding the tax rules can help investors plan better and maximize returns.