FAQ on Stocks

What are the tax implications on profit or loss in trading in shares?

All securities bought and sold after 1st September 2004 attracts Security Transaction Tax (STT). The STT is calculated as a percentage on the value of the shares bought or sold. The current STT rate is 0.15%. Currently the STT is levied only on equity securities.

Profit on stocks sold within 1 year from the date of purchase is considered as Short Term Capital Gains. Short Term Capital Gains attracts tax and is taxed at the rate of 10%.

Loss on stocks sold within 1 year from the date of purchase is considered as Short Term Capital Loss. Short Term Capital Loss can be offset against short term Gains during the same financial year.

Profit on stocks sold after 1 year from the date of purchase is considered as Long Term Capital Gains. Long Term Capital Gains is being exempted from tax since 1st September 2004.

Loss on stocks sold after 1 year from the date of purchase is considered as Long Term Capital Loss. Long Term Capital Loss cannot be offset against long-term capital gains.

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