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By IPOCheckr Editorial TeamLast reviewed
Selling IPO shares on the stock exchange is taxed as capital gains. As of November 2026, gains on listed equity shares held for 12 months or less are short-term and taxed at 20%; gains on shares held longer than 12 months are long-term and taxed at 12.5% on the amount above ₹1.25 lakh a year. Cess and any surcharge are added. Selling on listing day therefore creates a short-term gain or loss. These rates have applied to sales on or after 23 July 2024.
Held 12 months or less: 20% on the gain, plus cess and any surcharge.
Held more than 12 months: 12.5% on gains above ₹1.25 lakh a year, plus cess and any surcharge.
Selling on listing day is a short-term capital gain or loss.
Short-term losses can offset short- or long-term gains; long-term losses only long-term gains.
The Finance (No. 2) Act, 2024 changed capital gains tax for transfers made on or after 23 July 2024. For listed equity shares sold on a recognised stock exchange, where securities transaction tax (STT) applies, the CBDT's published FAQs set out the current position:
From 1 April 2026 the Income-tax Act, 2025 replaced the Income-tax Act, 1961. Reports on Budget 2026 indicate that the capital gains rates and holding periods for listed shares were carried over unchanged, but section numbers have been renumbered and the old terms ‘previous year’ and ‘assessment year’ have been replaced by ‘tax year’. Much existing material still refers to the familiar Section 111A (STCG) and Section 112A (LTCG) of the 1961 Act. Use the current return form and its instructions for the right schedule, and check with a tax professional if you are unsure.
For IPO shares the holding period is generally counted from the date of allotment, not the date you applied or the listing date. Shares allotted on 12 March 2026 and sold on 12 March 2027 have been held for exactly 12 months, which is not ‘more than 12 months’ – the gain is still short-term. Sell from 13 March 2027 onwards and it becomes long-term.
Your cost of acquisition is the issue price you paid (the final allotment price, after any employee or retail discount stated in the prospectus). The allotment advice from the registrar and your demat holding statement are your records for both the date and the price.
You are allotted 50 shares at ₹300 (₹15,000) and sell them on listing day at ₹345 (₹17,250). Brokerage and exchange charges on the sale come to ₹40.
Same 50 shares, but you sell 14 months after allotment at ₹480 (₹24,000). Ignoring charges, the long-term gain is ₹9,000. If your total long-term gains on listed equity and equity mutual funds for the year stay within ₹1.25 lakh, no LTCG tax is payable on it. If you had already used the exemption, the ₹9,000 would be taxed at 12.5% (₹1,125) plus cess.
The concessional STCG and LTCG rates for listed shares are tied to STT. When you sell on the exchange, STT is charged on the sale. For long-term gains the rules also expect STT to have been paid when the shares were bought, but shares acquired through an IPO are among the acquisitions the government has notified as exempt from that condition. So IPO shares sold on the exchange qualify for the listed-share rates.
STT rates are set in the Finance Act and can change. Budget 2026 raised STT on futures and options; reports indicate delivery trades were left at 0.1%. Your contract note shows the exact STT charged.
An IPO that opens below its issue price produces a capital loss if you sell. The set-off rules, which continue under the new Act, are:
In one year you make a short-term gain of ₹12,000 on IPO A and a short-term loss of ₹5,000 on IPO B. The net short-term gain is ₹7,000, taxed at 20%. If instead you had a ₹5,000 long-term loss, it could not reduce the ₹12,000 short-term gain; it would be carried forward against future long-term gains.
A few edge cases trip people up.
Primary rules and official pages this guide was checked against. Rules change, so the official text always prevails.
General information, not investment advice. Rules set by SEBI, RBI and the exchanges can change, so confirm current limits with your broker or the offer document.