Quick definitions
- Short-Term Capital Gains (STCG): Equity sold within 12 months. Taxed at 15% (plus cess/surcharge) when STT is paid.
- Long-Term Capital Gains (LTCG): Equity held >12 months. First ₹1,00,000 of gains is exempt each FY; balance taxed at 10% (no indexation) when STT is paid.
- Dividends: Taxed at your slab rate; no DDT. Brokers usually deduct 10% TDS above ₹5,000 per company per FY.
Worked examples (FY 2025-26)
1) Buy INFY at ₹1,400 (Jun 2025), sell at ₹1,610 (Jan 2026) — gain ₹210 per share. - Holding <12 months → STCG @15%.
2) Buy TCS at ₹3,600 (Feb 2025), sell at ₹4,400 (Mar 2026) — gain ₹800 per share. - Holding >12 months → LTCG. If total LTCG for the year is ₹1,60,000, taxable = ₹60,000 → tax ₹6,000.
Set-offs you can actually use
- STCL can be set off against both STCG and LTCG.
- LTCL can be set off only against LTCG.
- Carry forward losses for 8 AYs, but only if you filed your return on time.
Records to maintain
- Contract notes and broker P&L statements (download FY-wise).
- Dividend statements (for TDS reconciliation in 26AS/AIS).
- ISIN-wise capital gains summary — most brokers provide; keep your own spreadsheet too.
Practical tips
- Harvest losses judiciously in March to offset gains — but avoid wash trades; leave a cooling-off period.
- For IPO listings, holding period counts from allotment date, not listing date.
- NRIs: STCG/LTCG often subject to higher TDS; file returns to claim refunds where applicable.
Taxes change; verify slabs each Budget season. When unsure, speak with a tax professional.