Tax on IPO shares disposed of on listing day or within a year

Shares allotted in an IPO are listed equity shares once they list. A gain on disposing of them is a capital gain, and the rate depends on how long they were held, counted from the date of allotment.

The rates (from 23 July 2024)

• Held 12 months or less: short-term capital gain, taxed at 20% (section 111A), where securities transaction tax is paid on the sale.
• Held more than 12 months: long-term capital gain, taxed at 12.5% on gains above ₹1.25 lakh in a year (section 112A).
• A loss can be set off against gains as the Income-tax Act allows.

Charges on the sale

• Securities transaction tax of 0.1% of the sale value (delivery).
• Exchange transaction charges, SEBI fees, GST on brokerage and charges.
• Brokerage and a depository (DP) charge per scrip, which differ by broker.

newboard's listing-day calculator works these out for a price the user enters. Rates change with each Finance Act; the Income-tax Department's current rules are final.