Definition
Capital Gains (Equity)
Capital gains on equity arise when listed shares or equity funds are sold for profit, taxed as short-term or long-term depending on the holding period, with specific Indian rates.
Capital gains on listed equity shares and equity mutual funds depend on the holding period: gains on units/shares held up to one year are short-term and those held beyond one year are long-term, each taxed under separate provisions for equity, with long-term gains enjoying an annual exemption threshold.
Equity capital gains are taxed differently — and more favourably — than crypto/VDA gains, which face a flat 30% with no set-off. Equity losses can be set off and carried forward under prescribed rules.
Tracking purchase and sale dates and values is essential to classify and compute gains correctly. The AIS and broker statements help reconcile these for filing.
Related terms
- Tax-Loss HarvestingTax-loss harvesting is the practice of selling investments at a loss to offset taxable capital gains, reducing the overall tax bill while staying invested in a similar position.
- Form 26AS / AISForm 26AS and the Annual Information Statement are consolidated tax statements showing TDS, TCS, advance tax and reported financial transactions linked to your PAN.
- SIP (Systematic Investment Plan)A Systematic Investment Plan is a method of investing a fixed amount in a mutual fund at regular intervals, averaging the purchase cost and instilling investing discipline.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.