Module 7 ยท Trading, Taxes and Technicals
Capital gains on shares are taxed differently depending on how long you hold them.
In India, profit from selling shares is a capital gain. Long-term gains (holding over a year) on listed shares above a threshold are taxed at a flat rate; short-term gains are taxed at a higher rate.
Dividends are also taxable in the hands of the investor. Tax rules change, so always check current rates and your own slab.
Understanding tax helps you plan holding periods and net returns, but tax should never be the only reason to buy or sell a stock.
Example: TCS
If you hold TCS for over a year and sell at a profit, that long-term capital gain is taxed at a lower rate than a short-term gain. Holding longer can be tax-efficient - if it suits your plan.
In general, which is taxed at a higher rate in India?
Why is it wise to check current tax rules before planning a sale?