Capital Gains Tax on Shares (2025) | LTCG & STCG | F&O Trading Tax Rate AY 2025-26

                                         
How much income tax will be applicable on profit from the share market?    

Different types of income tax are imposed on the profits from the share market. There are two types of tax on equity trading on a stock: short-term capital gain and long-term capital gain. In the same way, intraday trading is taxed differently, and futures and options trading is taxed differently, so let us understand it in brief.  

Short Term Capital Gain (STCG):  

First of all, understand what short-term capital gain (STCG).  

It is called short-term capital gain whenever you hold a stock and that holding period is less than 1 year. For example, if you have bought any stock and made a profit by selling that stock before 15 days or 3 months or 6 months or 10 months i.e. before 1 year, then it is considered as Short Term Capital Gain (STCG).  

How much income tax will be applicable on the profit on short-term capital gain (STCG)?  

Short-term capital gains (STCG) are taxed at 20%, with a fixed 20% irrespective of the profit (₹25000 or ₹50000 or ₹100000).  

If there is a loss on Short Term Capital Gain (STCG), then what will be the income tax benefit?  

If you have incurred a loss on short-term capital gain (STCG), then you can carry forward that loss for the next 8 years, whereas if you have a profit in the next 1 or 2 years, then the previous one's Income tax can be saved by showing the loss.  

Click here for a Demat Account Opening in Zerodha (Investing and mutual fund free, F&O Per order Rs 20)     

Long Term Capital Gain (LTCG)?  

First of all, understand what is Long Term Capital Gain (LTCG).  

Whenever you hold a stock and that holding period is more than 1 year, it is called Long Term Capital Gain (LTCG). For example, if you buy any stock and hold it for the next 1 year, or sell that stock after holding it for more than 1 year, then the profit made from it is called Long Term Capital Gain (LTCG).  

How much income tax will be applicable on profit on Long Term Capital Gain (LTCG)?  

Long-term capital gain (LTCG) is taxed at 12.50% should the profit exceed one lakh, if the profit from long-term capital gain (LTCG) is less than one lakh, nothing will be taxed. If the profit becomes 3Lakhs or 4Lakhs, then there will be no tax on 1Lakh and whatever profit is made above 1Lakh, it will be taxed as long-term capital gain (LTCG) of 12.50%.  

If there is a loss on Long Term Capital Gain (LTCG), then what will be the income tax benefit?  

If you have made a loss on Long-term capital Gain (LTCG), then you can carry forward that loss for the next 8 years, whereas if you have a profit in the next 1 or 2 years, then the previous one's Income tax can be saved by showing the loss.  

Another way, you can reduce the loss of your Long term capital gain (LTCG) is by showing it in Short term capital gain (STCG) as well. If there is profit in short-term capital gain.  

But the profit from short-term capital gain (STCG) cannot be set off against the profit from long-term capital gain (LTCG).  

SPECULATIVE INCOME?  

Let us first understand what is Speculative income?  

The profit from intraday trading is called Speculative income, where within intraday trading, profits are earned only by intraday trading in stocks, and intraday trading in ETFs. Where the intraday trading period is only for one 1day, the shares are bought and sold on the same day before the close of the market, or shares sold and again bought before the close of the market on the same day which is called intraday trading.  

How much income tax will be applicable on the profit on Speculative income?                     

No separate fixed tax has been made for the profit from Speculative income, the profit from speculative income can be clubbed with business income if you are doing business, or if you are employed If you are living, then you can add it only along with the income from the job. Where the list of income tax has been fixed at 5%, 10%, 15%, 20%, 25% and 30%. So you will have to pay tax according to the list. Where you can also add expenses incurred in business, such as internet bills, you can also add the cost of computers used for trading.  

If there is a loss on Speculative income, then what will be the benefit on income tax?  

If there is a loss on Speculative income, then you can carry forward that loss for the coming 4 years, whereas if you have profit in the next 1 or 2 years, then by showing the previous loss Income tax can be saved. The important thing is that you cannot show the profit from this Speculative income in non-speculative income and can carry forward only for 4 years.  

Click here for a Demat Account Opening in Zerodha (Investing and mutual fund free, F&O Per order Rs 20)     

NON-SPECULATIVE INCOME     

Let us first understand what is non-Speculative income?  

Derivative segment in the stock market, such as futures and options, is called non-speculative income. If that profit is made only from Future and option trading only. Trading whether it is Nifty bank, Nifty, Sensex index, or any Stock future and option trading, this entire trading is considered within non-Speculative income.  

How much income tax will be applicable on the profit?                        

Profit from non-speculative income is not fixed like LTCG or STCG, if you are doing business, then the profit from non-speculative income can be treated as business income. You can add it only, or if you are doing a job, you can add it only along with the income from the job. Where the list of income tax has been fixed at 5%, 10%, 15%, 20% 25%, and 30%. So you will have to pay tax according to the list. Where you can also add expenses incurred in business, such as internet bills, you can also add the cost of computers used for trading.    
If you have rented an office, then you can also add the rent of that office to it, so here is the profit from non-speculative income, the internet bill or the expenses used in trading as well as the rent of the office. By adding, you can also deduct from the total profit.  

If you suffer any kind of loss in the business, then you can also deduct that loss from your future option trading profit.  

If there is a loss on non-speculative income, then what will be the benefit of income tax?  

If there is a loss on non-speculative income, then you can carry forward that loss for the coming 8 years, whereas if you have profit in the next 1 or 2 years, then the previous one's Income tax can be saved by showing the loss.  

Even, if there is a loss in non-speculative income but you have made a profit in Speculative income, we can also deduct the loss in non-speculative income from this speculative income.  

How to save income tax on share market profits?  

To save the profits from the share market, you can take any savings scheme plan or insurance plan, term plan or ULIP plan. Also investing in  ELSS MUTUAL FUND , we can save income tax.  

If you do not want to invest in the market, then you can save income tax even by taking a savings plan operated by banks. such as  PPF Investment of 1.5 lakhs every year or Sukanya Samriddhi Yojana if a girl child is born in the house, otherwise other insurances run by banks    Just like investing in an investment plan, income tax can be saved.  

Apart from this, income tax can also be reduced by showing children's school fees or medical expenses incurred at home.  

Click here for a Demat Account Opening in Zerodha (Investing and mutual fund free, F&O Per order Rs 20)     

Note:- This above information has been made for the purpose of your understanding, for filing income tax, or for more information, you must consult your chartered accountant.