Taxation of capital gains from sale of equity shares or equity oriented mutual fund !!!

Taxation of capital gains from sale of equity shares or equity oriented mutual fund (MF) depends on the period of holding. 

If the shares or MF are sold after holding for more than 12 months from the date of investment:

The capital gains are long-term capital gain . You have to pay only Securities Transaction Tax (STT) on such LTCGs, the amount is fully exempt from tax.

If the period of holding is not more than 12 months, the capital gains are short-term capital gains (STCG).
If STT is paid at the time of sale, the amount is taxable at 15.45 per cent (including education cess of 3 per cent).

In case of other MF investment that is other than equity that is debt and income funds, 

Long term capital gains are taxable at 10.3 per cent (including education cess), if indexation benefit is not claimed or at 20.6 per cent (including education cess) if indexation benefit is claimed.

The STCG are taxable at maximum marginal rate as applicable to the individual.


When to pay advance tax on such capital gains:

Tax on capital gains has to be paid within the timelines specified for advance tax to avoid penal interest. If you estimate that your total tax liability (after considering the tax deducted at source on estimated income including capital gains) is likely to exceed Rs 10,000 during the relevant financial year, advance tax needs to be paid.