Capital Gains Tax on Shares & F&O Explained (FY 2026-27)

Add 4% health and education cess to every figure. The 20% and 12.5% equity rates apply to sales on or after 23 July 2024 and are unchanged for FY 2026-27. They need securities transaction tax (STT) to have been paid, which it is on normal sales through a stock exchange.

The Income-tax Act, 2025 renumbered these provisions: the old Sections 111A, 112A and 112 are now Section 196, Section 198 and Section 197. The rates did not change with the new numbers.

• Listed shares and equity mutual funds: long term if held for more than 12 months.
• Other assets such as property, gold and unlisted shares: long term if held for more than 24 months.
• Debt mutual funds bought on or after 1 April 2023: always short term and taxed at your slab rate, however long you hold them.

The holding period runs from the date you bought to the date you sold. With several purchases of the same share, each lot is counted separately on a first-in, first-out basis, so part of one sale can be short term and part long term.

The first ₹1,25,000 of long-term gains on listed equity in a financial year is not taxed. It is one limit for the whole year, covering shares and equity mutual funds together, not per stock or per fund.

Shares bought before 1 February 2018 have a grandfathering rule: their cost can be taken as the market price on 31 January 2018 if that is higher, so gains made before that date stay untaxed. Equity gains get no indexation benefit.

Futures and options trading is not a capital gain. It is non-speculative business income: the net profit is added to your salary and other income and taxed at your slab rate. Because it is business income you can deduct trading expenses such as brokerage, exchange charges and advisory or internet costs used for trading, and you report it in ITR-3, not ITR-2.

Intraday trading in shares, where you buy and sell on the same day without taking delivery, is speculative business income. It is also taxed at slab rates and also goes in ITR-3.

F&O traders may need a tax audit depending on turnover and profit, and turnover for F&O is not the same as the value of contracts traded. If you trade often, check the audit rules with a chartered accountant before the filing deadline.

Take someone on a ₹15 lakh salary in the new regime who also sold shares during FY 2026-27: ₹1,00,000 of short-term gains and ₹3,00,000 of long-term gains. In the second column they also made ₹2,00,000 of F&O profit.

The ₹2,00,000 of F&O profit adds ₹32,500 of tax because it sits on top of the salary and is taxed in the 15% and 20% slabs. The capital gains tax stays at ₹43,550 either way, since it is charged at flat rates. Try your own figures in the capital gains & F&O tax calculator.

No. The Section 156 (earlier 87A) rebate does not reduce tax on gains charged at special rates, so the 20% STCG and 12.5% LTCG tax is payable even when your salary alone is fully covered.

There is a second catch: eligibility for the rebate is tested on total income including capital gains. If your salary income is just under the limit and capital gains take the total above ₹12 lakh, you lose the rebate on your salary tax as well.

₹2,00,000 of gains costs ₹72,150 here, not just the ₹9,750 of LTCG tax, because the salary is no longer covered. When total income is only slightly above ₹12 lakh, marginal relief limits the total tax to the income above the limit. The Section 156 rebate guide explains the limit and marginal relief.

• Short-term capital loss can be set off against both short-term and long-term capital gains.
• Long-term capital loss can be set off only against long-term capital gains.
• F&O (non-speculative) loss can be set off against other income except salary; what is left is carried forward against business income.
• Intraday (speculative) loss can be set off only against speculative income and carried forward for up to four years.
• Unused capital losses and F&O losses can be carried forward for up to eight years.

To carry any loss forward you must file your return by the due date. Booking losses on weak holdings before 31 March to offset gains, often called tax-loss harvesting, uses these rules.

• Salary TDS does not cover it. Your employer deducts tax on salary only. Tax on capital gains and trading income is yours to pay, through advance tax during the year or self-assessment tax before filing.
• Use the broker's capital gains statement. It lists each sale with buy date, sell date, cost and sale value, split into short and long term. Check it against the gains shown in your Annual Information Statement (AIS).
• Pick the right form. Salary plus capital gains goes in ITR-2; once you have F&O or intraday income, it is ITR-3.