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ITR filing 2026: How will ₹13 lakh income from IPO, trading, LTCG, STCG, interest and dividends be taxed?
5 min read | Updated on February 12, 2026, 15:14 IST
SUMMARY
Income-tax return filing for FY 2025-26: Since the normal income chargeable at slab rate does not exceed ₹12 lakh, you will get a rebate under Section 87A for full tax liability in respect of normal income. But you will have to pay tax on capital gains, which are taxed at special rates.
Know about taxation of incomes from multiple sources. | Image source: Shutterstock
As the financial year 2025-26 nears its end, this is a good time to take stock of the tax liability that may arise when you file your income tax return (ITR) in 2026. This year, you will be filing returns for income earned in FY 2025-26 (AY 2026-27), with July 31 being the due date for non-audit cases.
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₹3 lakh from frequent share trading (regular buying and selling for 3–5% profit),
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₹1 lakh from IPO applications where the allotted shares are sold immediately on allotment,
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₹3 lakh as short-term capital gains from shares held for 2–8 months,
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₹3 lakh as long-term capital gains from shares held for over one year,
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₹2 lakh as bank interest, and
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₹1 lakh as dividend income.
Since your total income exceeds ₹5 lakh, you are not eligible to claim a rebate under section 87A in the old tax regime. You will opt for new tax regime so that you can claim a rebate under Section 87A. The eligibility for rebate under Section 87A under the new tax regime is discussed later.
The share trading income will get taxed under the head “Profits and Gains of Business or Profession”. In my opinion, the profits on IPO allotments cannot be treated as business income and will have to be treated as short-term capital gains and taxed under the head Capital Gains. This is because the making of IPO applications and selling the shares allotted cannot be treated as something akin to a business activity. It is to be treated as an investment activity.
The short-term and long-term capital gains will obviously be taxed under the head “Capital Gains”. The bank interest and dividends will be taxed under the head “Income from other Sources.”
So, the normal income which gets taxed at slab rate will be as under for the Financial Year 2025-2026:
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Share trading profit: ₹3 lakh
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Bank interest: ₹2 lakh
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Dividends: ₹1 lakh
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Total normal income: ₹6 lakh
Since the normal income chargeable at slab rate does not exceed ₹12 lakh, you will get a rebate under Section 87A for full tax liability in respect of normal income. But you will have to pay tax on capital gains, which are taxed at special rates.
The income that gets taxed at special rates will comprise of the following:
Profits on IPO applications treated as short-term capital gains (STCG): ₹1 lakh to be taxed at 20% flat
STCG on shares: ₹3 lakh to be taxed at 20% flat
Long-term capital gain (LTCG) on shares: ₹3 lakh to be taxed at 12.50% flat
Total Income taxed at special rate: ₹7 lakh
So your tax liability on STCG of ₹4 lakh @ 20% is ₹80,000. The tax on the LTCG of ₹3 lakh works out to ₹37,500. The aggregate tax liability on capital gains adds up to ₹1,17,500. A cess of ₹4,700 cess @ 4% on the tax is payable. The aggregate tax payable will be ₹1,22,200.
| Income type | Amount (₹) | Head of income | Tax rate | Tax amount (₹) | Section 87A applicability | Final impact |
|---|---|---|---|---|---|---|
| Share trading profit | 3,00,000 | Profits and gains of business or profession | Slab rate (new regime) | 0 (rebate available) | Eligible (normal income ≤ 12 lakh) | No tax payable on this portion |
| Bank interest | 2,00,000 | Income from other sources | Slab rate | 0 | Eligible | No tax payable |
| Dividends | 1,00,000 | Income from other sources | Slab rate | 0 | Eligible | No tax payable |
| Total normal income | 6,00,000 | — | Slab rate | 0 | Section 87A rebate fully applies under new regime | Normal income fully tax-free |
| IPO gains treated as STCG | 1,00,000 | Capital gains (STCG) | 20% | 20,000 | Not eligible on special‑rate income | Tax payable |
| STCG on shares | 3,00,000 | Capital gains (STCG) | 20% | 60,000 | Not eligible | Tax payable |
| LTCG on shares | 3,00,000 | Capital gains (LTCG) | 12.5% | 37,500 | Not eligible | Tax payable |
| Total capital gains | 7,00,000 | — | Special rates | 1,17,500 | No rebate available | Tax payable |
| Health and education cess | — | — | 4% of tax | 4,700 | — | — |
| Final tax payable | — | — | — | 1,22,200 | — | Total tax liability |
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