IPO taxation in India: short-term and long-term capital gains

Tax rules change. The rates below are those generally applied to listed equity shares on which securities transaction tax (STT) is paid; confirm the current rates with a tax professional or the Income Tax Department.

Holding period

The holding period starts on the date of allotment. Shares sold within 12 months give short-term capital gain (STCG); shares sold after 12 months give long-term capital gain (LTCG).

• STCG on listed equity: taxed at 20%.
• LTCG on listed equity: gains above ₹1.25 lakh in a financial year are taxed at 12.5%.

Example

You are allotted 100 shares at ₹200 and sell on listing day at ₹260. The gain is ₹6,000 (before charges). Because you held them under 12 months it is short-term gain, taxed at 20% (plus cess), about ₹1,200.

Other costs

Brokerage and other expenses wholly incurred on the transfer can reduce your taxable gain; securities transaction tax (STT) itself cannot be deducted. These charges appear in your broker’s contract note. Keep the allotment confirmation and contract notes for your tax filing.

Losses

Short-term losses can be set off against short-term and long-term gains and carried forward for eight years if you file your return on time. Ask a tax professional about your case.

Frequently asked questions

Is the listing gain taxable even if I do not sell?

Tax arises when you sell. Holding the shares does not create a capital gain.

Last updated 2026-10-20. Information only, not investment advice.