"Long Term Capital Gains Tax" - is it based on the traders income slab or fixed at 20%?

“Long Term Capital Gains Tax” - is it based on the traders income slab or fixed at 20%?

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Long term capitals gains in the context of selling shares to realize a profit and the shares being held for more than 365 days is completely exempted of tax under the income tax laws.

In other words the long term capital gains tax is 0%.

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In addition to Karthik’s answer another point to note is that only such profits from sale of shares are exempt from tax, on which STT has been paid i.e it should have been traded on the Exchanges. If LTCG is from sale of shares outside of the Exchange, rate of tax would be 20%

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  • If the sale of shares fall within 1 year period (short term capital gains), the profits will get added to your Net Income (salary + other income) and taxation will be applied based on which slab rate you are in. 10% 20% or 30% etc.
  • If the sale of shares fall above 1 year period (long term capital gains), the profits are tax free (you would have already paid the STT to the exchange while selling).
  • If the sale of shares from penny stocks and stocks not traded through exchange, a flat 20% tax is applied on the profits.
  • If the sale of bonus shares within 1 year of bonus shares addition to your demat, it will considered in your taxable income and you will pay tax as per slab rates.
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