Taxation of Equity Gains 2026 | Investor's Guide

Taxation of Equity Gains: The 2026 Guide

Mastering the New Income-tax Act, 2025 Framework

For the financial year 2026-27, the tax framework is designed to reward long-term discipline while curbing aggressive short-term trading through higher transaction costs. Here is everything a modern investor needs to know.

1. Short-Term vs. Long-Term: The 12-Month Rule

Short-Term (STCG)

Held for 12 months or less.

Long-Term (LTCG)

Held for more than 12 months.

*Note: Unlisted shares still require a 24-month holding period for LTCG status.

2. Tax Rates & Exemptions

Gain Type Tax Rate Exemption Limit
STCG (Listed Equity) 20% None
LTCG (Listed Equity) 12.5% ₹1.25 Lakh / year

3. The 2026 Shift: Buyback Relief

Big Update: Share Buybacks are no longer taxed like dividends at high slab rates. As of April 1, 2026, they are treated as Capital Gains. You only pay tax on the actual profit, saving retail investors up to 25% in tax liability compared to the previous regime.

4. Securities Transaction Tax (STT)

While delivery rates are unchanged, derivative trading costs have risen to curb speculation:

  • Equity Delivery 0.1% (Buy/Sell)
  • Equity Futures 0.05% (Sale)
  • Equity Options 0.15% (Premium Sale)

💡 Tax Loss Harvesting Pro-Tip

You can set off Short-Term Losses against both STCG and LTCG. However, Long-Term Losses can only be offset against LTCG. Don't forget to carry forward unadjusted losses for up to 8 years!