Finance Act 2024 on WebNotes

Capital gains tax on equity in India: complete guide

Mon, 18 May 2026 00:00:00 +0000

Capital gains tax on equity in India is the income-tax charge that applies when a taxpayer transfers a listed equity share, an equity-oriented mutual fund unit, or a derivative interest that meets the equity-tax definition and realises a gain. The Indian framework distinguishes short-term capital gains (STCG) from long-term capital gains (LTCG) by holding period, and taxes each at a specified rate that has been amended materially in the 2018, 2024 and intervening Finance Acts. The framework rests on three pillars: the holding-period rule that determines short-term vs long-term classification, the rate schedule under Section 111A (STCG) and Section 112A (LTCG), and the Securities Transaction Tax (STT) precondition that makes equity-tax rates available only on transactions on which STT has been paid.

Capital gains tax in India

Sat, 16 May 2026 00:00:00 +0000

Capital gains tax in India is the levy imposed on the profit arising from the transfer of a capital asset, governed principally by Chapter IV-E (Sections 45 to 55A) of the Income Tax Act, 1961. The tax applies to a broad spectrum of asset classes including listed equity shares, mutual fund units, debt instruments, unlisted shares, immovable property, bullion, and other capital assets, with rates and holding-period thresholds varying by asset class and by the period of holding. The regime has been substantially restructured by the Finance (No. 2) Act, 2024, which standardised the long-term capital gains (LTCG) rate at 12.5 per cent across asset classes, raised the LTCG exemption for listed equity and equity-oriented mutual funds from Rs 1 lakh to Rs 1.25 lakh, abolished indexation for most asset classes, and rationalised the holding-period thresholds.

Section 111A of the Income Tax Act

Sat, 16 May 2026 00:00:00 +0000

Section 111A of the Income Tax Act, 1961, is the operative tax provision that governs short-term capital gains (STCG) arising from transfers of listed equity shares, units of equity-oriented mutual funds , and units of business trusts (REITs and InvITs), subject to the condition that Securities Transaction Tax (STT) has been paid on both acquisition (with prescribed exceptions) and sale. The section was inserted by the Finance Act, 2004 alongside Section 10(38) (the now-repealed LTCG exemption), and operates as the structural counterpart to Section 112A for short-term holdings. As of the post-23 July 2024 regime introduced by the Finance (No. 2) Act, 2024, STCG under Section 111A is taxed at 20 per cent, with no exemption threshold and no indexation, applicable to gains on listed equity and equity-oriented MF held for up to 12 months.

Section 112A of the Income Tax Act

Sat, 16 May 2026 00:00:00 +0000

Section 112A of the Income Tax Act, 1961, is the operative tax provision that governs long-term capital gains (LTCG) on transfers of listed equity shares, units of equity-oriented mutual funds , and units of business trusts (REITs and InvITs), subject to the condition that Securities Transaction Tax (STT) has been paid on both acquisition and sale (with prescribed exceptions). The section was inserted by the Finance Act, 2018, effective from 1 April 2018, replacing the long-standing Section 10(38) exemption that had operated since the introduction of STT in 2004. As of the post-23 July 2024 regime introduced by the Finance (No. 2) Act, 2024, LTCG under Section 112A is taxed at 12.5 per cent on gains above an annual exemption threshold of Rs 1.25 lakh, with no indexation benefit. The section operates alongside Section 111A (short-term capital gains on the same asset class at 20 per cent) and the broader capital gains tax in India framework.

Taxation of Parag Parikh Flexi Cap Fund (PPFCF)

Sat, 16 May 2026 00:00:00 +0000

The taxation of the Parag Parikh Flexi Cap Fund (PPFCF) is governed by the equity-oriented mutual fund tax regime under the Income-tax Act, 1961, as the scheme maintains a minimum 65 per cent Indian equity allocation that satisfies the statutory definition of an equity-oriented fund. Capital gains on PPFCF units accordingly fall under Section 112A for long-term capital gains (LTCG) and Section 111A for short-term capital gains (STCG), and not under the residual capital-gains provisions that apply to debt-oriented mutual funds or international fund-of-fund schemes.

How to tender shares in a buyback on Zerodha