Capital Gains Tax
Tax on the profit realised when a capital asset is transferred.
Formula
Taxable Gain = Sale Consideration - Cost of Acquisition - Cost of Improvement - Transfer Expenses
Unit
₹
In depth
Capital gains tax arises only on transfer, so unrealised appreciation is untaxed however large it becomes — which is why deferring a sale defers the liability and lets the untaxed amount continue compounding. The rate depends on the holding period and the asset class, with listed equity on which STT was paid receiving concessional treatment and a shorter qualifying period than most other assets. Rates and thresholds were revised substantially in July 2024, so any computation must use the schedule applicable to the transfer date rather than a remembered figure. Brokerage is deductible as a transfer expense; STT is not.
Worked example
Buying 100 shares at ₹400 with ₹60 brokerage and selling at ₹550 with ₹80 brokerage gives a gain of 55,000 - 40,000 - 60 - 80 = ₹14,860. The rate applied depends on how long the shares were held.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Capital Gains Tax” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.