Manish Kothari
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Manish Kothari


An unrealised gain comes into picture when the investment has increased in its value but the investor i.e. you have not sold any of it. This was just a brief but in this article, we are going to explore different sides of unrealised gains and gain a better understanding of the same. So let’s get started. 


When an investor invests in an asset class such as a stock or etc, they do so with the vision of increasing its value. The proper term for the increase here is referred to as Capital Gains. Nevertheless, just because the asset has increased in value does not signify you have captured that value. If you do not sell it and the price further falls, then you won’t get to keep the gain. When that happens, the gain is said to be unrealised. When you sell an investment with an unrealised gain, that gain becomes realised because you will receive the increased value. 

For instance, let us suppose you buy a share of stock for Rs 450. If the price rises to Rs 550, then you have an unrealised gain of Rs 100. To clearly see what an unrealised gain is, think about what you have if the stock price goes down to Rs 450 before you sell. At that point you are at break even as you did not capture or realise the Rs 100 gain. 

This may seem like a very general and basic decision to make, but it is significant because your tax bill depends on whether or not your gains are unrealised or realised. If you have a taxable gain, the timing of those matters along with other factors. 


The prime reason we need to gain understanding of the working is to know how it will impact our tax bills. Unrealised gains are not taxed. We do not incur any tax liability until we sell our investments and realise that particle gain. 

Nevertheless, not all the gains which are realised are taxed at the same rates. There are two prime tax structures depending on the tenure which decides whether or not the gains are long term or short term.

A STCG (Short term capital gain) is one that is released within a year of buying the investment. STCG are taxed at your ordinary income tax bracket. 

LTCG (Long term capital gains) are gains that are not realised until at least a year have passed since you bought that investment. The tax rate on LTCG is 20% with indexation benefits. 


The contrary of an unrealised gain is of course an unrealized loss. If the value of your investment falls further after you buy it, you have to bear a capital loss. The loss is unrealised until you sell the investment or a part of it. 

For instance, if you had bought the stock in the previous instance at Rs 450 then the price comes down to Rs 350, the Rs 100 price drop is an unrealised loss. If you sell the stock at Rs 350, your unrealised loss converts into a realised loss of Rs 100. 

Realised losses can be used to offset the capital gains for the purpose of determining the liability of tax. 


  • Unrealised gains are increase of the value of investments that you have not converted into real gains by selling it 
  • It is not taxed until and unless you sell your investments and convert this into real gains. 
  • The tax liability on real gains depends on the income tax slab you fall in and the tenure you hold the investments for.