30-Day Stock Market Series
Day 24 of 30
Taxes on Stock Market Gains: STCG, LTCG & F&O Tax in India
The government is your silent partner in every trade. Understanding taxes helps you make better investment decisions and keep more of your returns.
Equity Tax Structure (Post-2024 Budget)
LTCG (Long-Term Capital Gains)
Holding period: >1 year. Tax: 12.5% on gains above ₹1.25 lakh per year. No indexation benefit for equities.STCG (Short-Term Capital Gains)
Holding period: ≤1 year. Tax: 20% flat. Applies to all equity delivery trades held less than 12 months.F&O Taxation: Business Income
Futures & Options profits/losses are treated as business income (non-speculative) — not capital gains. This means:
- Taxed at your applicable income slab rate (up to 30%+surcharge)
- F&O losses can be set off against other business income
- ITR-3 must be filed if you trade F&O — even if you're salaried
- Tax audit required if F&O turnover > ₹10 crore (or <6% profit on turnover)
# Tax calculation example
ltcg_gains = 250000 # ₹2.5L long-term gains
ltcg_exempt = 125000 # ₹1.25L exemption
ltcg_tax = (ltcg_gains - ltcg_exempt) * 0.125
stcg_gains = 80000 # ₹80K short-term gains
stcg_tax = stcg_gains * 0.20
total_tax = ltcg_tax + stcg_tax
print(f"LTCG Tax: ₹{ltcg_tax:,.0f}")
print(f"STCG Tax: ₹{stcg_tax:,.0f}")
print(f"Total Tax: ₹{total_tax:,.0f}")
Tax-Loss Harvesting
Before March 31 (financial year end), sell loss-making positions to book losses that offset your gains. You can repurchase the same stock after 24 hours. This strategy legally reduces your tax liability.
LTCG HarvestingIf you have unrealised long-term gains, consider booking them in a year where gains are below ₹1.25L (tax-free). Immediately rebuy at the new cost basis. This "resets" your cost with zero tax.
Dividend Taxation
Dividends are now taxed as per your income slab (after the 2020 DDT removal). High-dividend stocks are tax-inefficient for investors in the 30% bracket — prefer growth stocks instead.
Today's Action
Download your broker's Tax P&L statement (Zerodha: Console → Tax P&L). Identify your STCG and LTCG positions. Plan your holding periods to qualify for LTCG treatment.