What is the period of holding?

The period of holding is the time you owned a capital asset before you transferred it. It is the line between a short-term gain and a long-term gain. The rate follows that line. A longer holding is not, by itself, a lower bill. It is the test the Act uses to pick the section.

Section 2(101) of the Income-tax Act, 2025, which was section 2(42A), says a short-term capital asset is one held for not more than twenty-four months. For a security listed on a recognised stock exchange in India, a unit of an equity-oriented fund, a unit of the Unit Trust of India, or a zero-coupon bond, twelve months is substituted. A sale on that anniversary is still short-term. The capital gains guide uses the same test for property, where the usual line is twenty-four months.

The department’s page on the sale of shares counts the period from the date of purchase or acquisition until the day immediately before the transfer. If listed shares are sold through a broker and the contract is followed by delivery, that page treats the broker’s note as the date of transfer, so the count runs from purchase to that note.

An IPO allotment is the acquisition for a normal public issue. The shares are yours before they list. Listing is when you are allowed to sell. A sale that day has a holding of a few days, which is not more than 12 months, so Section 196 is the section when securities transaction tax is paid on the sale. The Act does mention “the date of allotment” for bonus shares and for shares an employer allots free or at a concession. Those are special cases. They are not a separate clock for a plain IPO.

Demat accounts use first-in-first-out. The securities that entered first are deemed to be sold first. Two lots, one from an IPO and one bought later on the market, do not get averaged into one date. The listing-gains guide shows a listing-day sale and a sale held past twelve months, on the same lot, so the only thing that changes is the clock.

Checked on 3 November 2026. Count the months from allotment, or from the purchase date on the contract note, and stop the day before you sell. A bonus share and an employee share have their own start dates in the Act, named above. A second purchase on the market does not reset the date of the IPO lot still sitting in the account. Sell the older lot first in your own working, because the demat rule will do that anyway.