If a share sells above its cost, which part is the gain?
What is the gain?
A capital gain starts with the sale value minus the purchase cost. Eligible expenses can change the final taxable gain.
Why do the dates matter?
, or securities transaction tax, is a tax charged on share trades made on a stock exchange. These rules assume STT was paid on the trades. Holding longer than 12 months is long term. Holding for 12 months or less is short term.
Do both gains use one rate?
No. Current tax rules use 20% for short-term gains on those shares. They use 12.5% above the yearly ₹1,25,000 tax-free limit for long-term gains.
How are two sales separated?
1,000 shares bought on 5 January 2026 at ₹100 sell on 5 June 2026 at ₹150. Their short-term gain is ₹50,000. Another 1,000 bought on 10 January 2024 at ₹200 sell on 10 June 2026 at ₹400. Their long-term gain is ₹2,00,000.
What this does not establish
A gain before tax does not equal money kept after tax and charges.
In short
- Sale and purchase figures show the starting gain.
- Holding dates and the yearly tax-free limit for long-term gains affect the tax calculation.
- Long term, because the threshold was reached
- Neither category, because both need a longer hold
- Short term, because long term needs more than the threshold
Show the answer
C. Short term, because long term needs more than the threshold
Current tax rules treat more than 12 months as long term. Exactly 12 months remains short term.