Smallcases are baskets of stocks/ETFs bought and managed together. The same taxation guidelines that apply to stocks also apply to smallcases.

Long-Term Capital Gains (LTCG) Tax

• If you sell your smallcase stock investments after 12 months of buying, your investments qualify for long-term capital gains tax.
• The LTCG tax rate is 12.5% on gains exceeding ₹1.25 lakh

Short-Term Capital Gains (STCG) Tax

• If you sell your smallcase stocks before 12 months of holding, you will have to pay a short-term capital gains tax.
• The STCG tax rate is 20% on the profits made (not applicable to losses).

Dividends

• Dividends on stocks are no longer tax-free in the hands of investors. They are taxed according to the investor's applicable income tax slab.