How gains on unlisted shares are taxed in India

Unlisted shares are taxed differently from listed shares, and the differences matter. The summary below reflects the rules applicable for FY 2025-26. Tax law changes; always confirm with your chartered accountant.

Short-term or long-term?

The holding period is what counts:

• Held for more than 24 months: long-term capital gain (LTCG)
• Held for 24 months or less: short-term capital gain (STCG)

For listed shares the threshold is 12 months, so do not assume the same rule applies.

Rates

• LTCG on unlisted shares is taxed at 12.5%, without indexation, for transfers on or after 23 July 2024.
• STCG on unlisted shares is added to your total income and taxed at your slab rate.
• Surcharge and 4% health and education cess apply on top.

The ₹1.25 lakh annual exemption on long-term gains applies to listed equity. It does not apply to unlisted shares.

When the shares came from an IPO

If the company lists and you sell on the exchange, the shares are then listed shares. The holding period still counts from when you originally acquired them, which usually makes the gain long-term.

A rule buyers should know

If you buy unlisted shares at a price significantly below their fair market value, the difference can be taxed in your hands as income. Buying at a fair, documented price protects you. Keep your contract note and payment proof.

ESOP shares

If your shares came from an employee stock option plan, the tax picture has two stages: tax at exercise and capital gains at sale. We cover this separately in our ESOP guide.

Keep records

Hold on to:

• The contract note or order confirmation showing price and date
• Bank statements showing the payment
• Your depository statement showing the credit

Use the capital gains calculator on Finlaunch for a quick estimate, then let your accountant confirm the final numbers.