Made money in the markets this year? Congratulations. Now let us make sure the taxman gets exactly what he is owed and not a rupee more.
The current rates for equity
For listed shares and equity mutual funds where STT is paid: gains on holdings of one year or less are short term capital gains, taxed at 20%. Gains on holdings over one year are long term, taxed at 12.5%, but only on the amount above Rs 1.25 lakh per year. That exemption resets every financial year.
A quick example
Anjali sold mutual funds she held for three years, making a Rs 3 lakh gain, plus some shares held for six months at a Rs 50,000 gain. Her LTCG tax: 12.5% on Rs 1.75 lakh (3 lakh minus the 1.25 lakh exemption), about Rs 21,875. Her STCG tax: 20% of Rs 50,000, Rs 10,000. Plus 4% cess on both.
Ways to reduce the bill, legally
- ✓Harvest the exemption: book up to Rs 1.25 lakh of long term gains every year, even if you buy back the next day
- ✓Set off losses: short term losses reduce both STCG and LTCG, long term losses reduce LTCG, and unused losses carry forward 8 years if you file on time
- ✓Hold past one year where you can: 12.5% beats 20% comfortably
Filing gains correctly
Capital gains push you into ITR-2 and the department already sees your trades in AIS, so accuracy matters. Saathi.Tax Pro handles the whole schedule: enter your broker statement numbers and we compute STCG, LTCG, the exemption and set offs correctly, then cross check against AIS before filing.
