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Personal Finance News

I earned ₹11,000 from an IPO listing in FY 2024-25. Do I owe taxes despite having no extra income?

rajeev kumar
By Rajeev Kumar

3 min read | Updated on March 21, 2025, 17:23 IST

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SUMMARY

As per the income-tax rules, you are required to pay tax on any income from assets for which special rates have been provided under the Income-tax Act, 1961, even when the total income is less than the basic exemption limit.

income tax on IPO income

You need to pay tax on IPO income even if it is below basic exemption limit. | Image source: Shutterstock

Today we have a tax question from Abhinav Sharma, who has no income from any other source. But he has earned ₹11,000 from an Initial Public Offering (IPO) in FY 2024-25.

In an email, Abhinav asked us whether he would have to pay any tax on this ₹11,000 income? "I earned ₹11,000 from IPO listing and I don't earn any money. Will I have to pay income tax? I have Pan Card also," he wrote in the mail.

The answer is yes, Abhinav would have to pay tax on this ₹11,000 income. But the amount of tax that he would need to pay will depend on when he sold the IPO shares.

Replying to Abhinav's query, CA Dr Suresh Surana said, "If your total income for the financial year is only ₹11,000, you may still be subject to tax depending on when you sell the IPO shares."

Readers should note that the tax treatment of capital gains from equity shares and equity mutual funds is different from tax treatment of income tax from salary, business, housing property, bank deposits etc.

As per the income-tax rules, taxpayers have to pay tax on any income from assets for which special rates have been provided under the Income-tax Act, 1961, even when the total income is less than the basic exemption limit. (Check here for the full list of special rate incomes). These special rate incomes include capital gains from equity shares, including IPO shares, and equity mutual funds.

How much tax would he need to pay?

As Abhinav sold his shares in less than 12 months, the income would be taxed as short-term capital gains (STCG).

The STCG tax rate for FY 2024-25 was increased from 15% to 20% for assets sold on or after July 23, 2024. However, 15% tax applies on any STCG booked before July 23 of FY 2024-25 (i.e. between April 1 and July 23).

"If the shares allotted in an Initial Public Offering (IPO) are sold within 12 months, the profit is treated as short-term capital gain (STCG) and is taxed at 20% under Section 111A if sold on or after 23 July 2024 (15% if sold before July 23, 2024), regardless of whether your total income is within the basic exemption limit. This is because the basic exemption limit does not apply to income taxed under Section 111A," said Dr Surana.

Therefore, Abhinav would need to pay 15% of ₹11,000, i.e. ₹1650 if he sold the IPO shares before July 23, 2024.

The tax would be 20% of ₹11,000, i.e. ₹2200, if he sold the IPO shares on after July 23, 2024.

Have queries related to income tax and personal finance? We will have them answered by experts. Write to rajeev.kumar@rksv.in
Disclaimer: The views and opinions expressed above are those of respective experts/commentators and do not reflect the views of Upstox. The above Q&A is only for informational purposes and should not be considered investment advice from Upstox.
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About The Author

rajeev kumar
Rajeev Kumar is a Deputy Editor at Upstox, and covers personal finance stories. In over 11 years as a journalist, he has written over 2,000 articles on topics like income tax, mutual funds, credit cards, insurance, investing, savings, and pension. He has previously worked with organisations like 1% Club, The Financial Express, Zee Business and Hindustan Times.

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