The Complete IPO Guide for Indian Investors · Chapter 13 of 15
Taxation on IPO Gains in India
Short term and long term
Gains on listed shares sold within 12 months of allotment are short-term capital gains; if held beyond 12 months, they are long-term.
Current rates
At the time of writing, short-term gains on listed equity shares sold through the exchange are taxed at 20%, and long-term gains above ₹1.25 lakh in a financial year are taxed at 12.5%, plus surcharge and cess where applicable. Tax rules change in the Union Budget, so always check the current position.
Worked example: you sell on listing day with a gain of ₹10,000 on one lot. Short-term tax at 20% is about ₹2,000, plus cess, before brokerage and other charges.
Other points
Securities transaction tax is paid on each sale. Capital losses can be set off against capital gains under the usual rules and carried forward if you file on time. Keep contract notes and your demat statement for the return.
Get advice
This chapter is general information. For your own filing, consult a qualified tax professional.
Key takeaways
- The holding-period threshold for listed shares is 12 months.
- Rates change with the Budget: always verify the current ones.
- Keep your records for the tax return.
- Losses can be set off against gains under the rules.