What is Capital Gains Tax in India?

The profits you make through the purchase and sale of equity shares and equity oriented mutual funds are called Capital gains. If you lose some money in the bargain, it’s called a Capital loss. Depending on the time gap between the buying and selling, these gains can be classified as Short term or Long term capital gains. When you sell shares or equity based mutual funds through the National Stock Exchange or the Bombay Stock Exchange, a securities transaction tax is paid.

The gains or losses made on the sale of shares or mutual funds that are held for less than one year are called Short term capital gains or losses. If the holding period is more than a year, the same gains or losses become, Long term. Short term gains on shares and equity based mutual funds are taxed at a special rate of 15%. If, unfortunately, there are losses, they can be adjusted against short term or long term capital gains on the sale of other assets. If the losses cannot be adjusted in the current year, then they can be carried forward for a period of 8 years. On the other hand, long term capital gains on shares and mutual funds are completely exempt from tax. That means, no tax. However, long term capital losses on shares or mutual funds cannot be adjusted against any other income.

Also Read:-Everything You Need to Know about Capital Gains Tax in India

Also Read:-Capital Gains – when and to what extent are they exempt from tax