How to Sell Stocks in India: Process, Settlement, and Taxes

Selling a stock you hold is a straightforward order on your trading app — but what happens behind the scenes (settlement, taxes, charges) is worth understanding so the amount that actually lands in your bank isn't a surprise. (Selling mutual fund units instead? See our mutual fund redemption guide — the process and tax rules differ.)

Step-by-Step: Selling a Stock

1. Log in to your trading app and locate the stock in your holdings.
2. Place a sell order — choose market order (executes at current price) or limit order (executes only at your specified price or better).
3. Order execution — during market hours (9:15 AM–3:30 PM IST on NSE/BSE trading days), a matching buy order executes your sale.
4. Settlement (T+1) — since 2023, Indian exchanges settle trades on a T+1 basis: shares leave your demat account and sale proceeds reach your linked bank account by the next trading day.
5. Contract note — your broker issues a contract note confirming price, quantity, and charges — keep this for tax filing.

What Gets Deducted From the Sale Proceeds

• Securities Transaction Tax (STT) — charged on both buy and sell for delivery-based equity trades.
• Brokerage — flat fee or percentage depending on your broker's plan (many discount brokers charge zero or a flat fee per trade for delivery).
• Exchange transaction charges, SEBI turnover fee, stamp duty, GST on brokerage — small percentage-based charges bundled into your contract note.

None of these are usually large individually, but they add up on frequent trading — a reason "buy and hold" tends to cost less in cumulative charges than active trading.

How the Sale Is Taxed

• Short-Term Capital Gains (STCG): applies if you held the share for 12 months or less. Taxed at a flat rate on listed equity (check the current rate for the assessment year — this changed in the Union Budget 2024).
• Long-Term Capital Gains (LTCG): applies if held for more than 12 months. Gains up to a threshold in a financial year are exempt; gains above that are taxed at a flat LTCG rate.
• Your broker's contract notes and the Annual Information Statement (AIS) on the income tax portal both report your trades — reconcile these when filing your return.

Common Mistakes When Selling

• Selling before the 12-month LTCG cutoff by a few days, converting a lower-taxed long-term gain into a higher-taxed short-term one — check the purchase date before selling if you're near the boundary.
• Forgetting stocks held across multiple demat accounts when calculating total capital gains for the year.
• Not accounting for STT as a cost when calculating your actual profit — it's a real deduction, not just a line-item.
• Panic-selling during volatility without a plan — a sell decision should follow your own thesis for buying, not the day's headlines.

Key Principle

Selling is a taxable event the moment it settles — plan the when (holding period, tax bracket, other gains/losses that year) as deliberately as you planned the what when you bought.