On this page
The short version
- Short-term (held ≤ 24 months): taxed at your slab rate — as high as 30% + surcharge + cess.
- Long-term (held > 24 months): taxed at **20% with indexation**.
- Indexation typically shaves off 6–9% effective tax vs the headline 20%.
Holding period and why it matters
The clock starts on the **date of transfer into your demat** (not the date you paid). For off-market transfers, this is the DIS execution date shown on your CDSL/NSDL transaction statement.
Two months below 24 can wipe out half your after-tax gains. Many investors wait out the 24-month mark before selling — especially if the company has since listed and lock-ins have expired.
Stamp duty
Off-market equity transfers attract 0.015% stamp duty on the transfer value. Polemarch deducts and remits this automatically; you'll see it on your invoice.
TDS on proceeds
For non-resident sellers (NRIs), 20% TDS under section 195 applies on the capital gain. Resident investors have no TDS — you report and pay directly via your ITR.
Reporting on ITR
Unlisted-share capital gains go on:
- Schedule CG in ITR-2 (for salaried + capital-gains) or ITR-3 (for business + CG).
- Separate rows for STCG (short-term) and LTCG (long-term).
- For LTCG, you also fill the indexation worksheet to compute the indexed cost of acquisition.
Keep your Polemarch invoice + CDSL/NSDL transaction statement — both will be demanded if a notice comes.
Losses
- Short-term losses can be set off against any capital gain (short or long).
- Long-term losses can only be set off against long-term capital gains.
- Unabsorbed CG losses carry forward for 8 assessment years.
Grandfathering
For shares bought before 31 January 2018 and sold later, grandfathering under Section 112A does not apply to unlisted shares — it's a listed-equity-only provision. Full LTCG (20% with indexation) applies on the actual holding period.
Watch out
- Buying through a private company vs personal demat: taxation differs radically. Consult a CA before structuring through an HUF, LLP, or corporate vehicle.
- Conversion events (e.g. CCPS → equity on IPO): holding period is *continuous* from the original CCPS purchase in most cases — but this is a grey area, always get it in writing from your auditor.
This article is guidance, not advice. Always validate with your CA before filing.