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What are the Various Types of Taxes on Stock Trading in India…!!

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taxes on stock trading

Stock trading has become mainstream these days in India. With the rise of urban Indian Middle Class, the new generation of people is searching for different avenues for a better income generation. The stock market has proven to be the easiest means to put their capital and be a part of the country’s growth story. As the government is focusing more on the digitalization of the financial system, more people will be joining the stock market in the future. But one must remember a few things, before investing in the stock market, especially if you are in a tax bracket.  

We all aware that the income from base salary, rental income and business income is taxable. But apart from that, any income from the selling of shares are also taxable. Income or loss from the sale of equity shares is taxed is covered under the head “Capital Gains “. There are mainly two types of taxes:  

Price Table
Short Term Capital Gain Tax: If an investor sold equity shares within 12 months of purchase, then the seller makes a short-term capital gain or incur a short-term capital gain. A seller makes short term capital gains tax, where shares are sold at a higher than the purchase price.  

Calculation of Short-term capital gain = Sale price- Expense cost on sale – Purchase Price.  

Long Term Capital Gain Tax: – If the equity shares listed on the stock exchange are sold after 12 months of purchase, the seller may make a longterm capital gain or incur long term capital loss.   

Rate of Taxation on the gains from Equity Shares…!!   

  • In the case of short-term capital gain tax, it is taxable at 15%, irrespective of your tax slab whether its 10%, 20% or 30%.  
  • Long term capital gain on equity shares listed on the stock exchange are not taxable up to Rs 1 lakh. But In case of more than 1 lakh, then it will attract a capital gain tax of 10%.        

Other Taxes:   

Securities Transaction Tax: It is a tax levied on securities trades. Different STT rates are applicable to equity (Cash) and Future and Options (F&O) transactions. If the trade is an equity delivery trade, then a tax of 0.1% on the turnover is levied on both the buyside and sellside of each trade. But in case, if the trade is squared off (closed) with the same trading day, meaning it is an intra-day transaction, then the STT rate applicable is 0.025% on the sellside trades only. 

*Disclaimer: investment in securities market are subject to market risks, read all the related documents carefully before investing 

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