India has emerged as the global leader in the initial public offering (IPO) market, with the country commanding a 36% share of total IPO listings globally in Q3 2024. This marked a significant milestone, as India surpassed the United States, which held just a 13% share during the same period. The surge in IPO activity in India in Q3 2024 is a clear reflection of the growing investor confidence and economic dynamism within the country. With 27 IPOs in the third quarter, India recorded its highest quarterly IPO listings in the past two decades, showcasing an increase of 29% from Q3 2023.

Record-Breaking IPO Fundraising

The funds raised through these IPOs also saw a remarkable surge, totaling US$ 4.27 billion (approximately Rs. 36,027 crore), a 142% increase compared to the previous year. This surge in funds raised represents the continued attractiveness of India's stock market to both domestic and international investors. The number of deals in Q3 2024 saw a 108% increase from the previous quarter, highlighting a growing trend of companies choosing to go public in India. Some of the notable IPOs during the quarter included major players like Bajaj Housing Finance, Ola Electric Mobility, and First Cry, which have generated significant buzz and interest among retail and institutional investors alike.

This robust IPO performance further strengthens India's position as an attractive investment destination in the global markets, where growth potential and economic resilience are drawing attention from across the globe.

IPO Taxation in India: What Investors Need to Know

While IPOs continue to offer significant returns for investors, it is essential to understand the tax implications on gains arising from these investments. According to Cleartax, the taxation of IPO profits depends largely on the holding period of the shares post-listing.

1. Short-term capital gains (STCG): If the shares are sold within 12 months of allotment, the profits are categorized as short-term and taxed at 20% plus cess. This is an important consideration for investors looking to take quick profits from IPO listings.

2. Long-term capital gains (LTCG): Shares held for over one year qualify for long-term capital gains. Investors will enjoy tax-free gains of up to Rs. 1.25 lakh (approximately US$ 1,481). However, any gains exceeding this amount will be subject to a tax rate of 12.5%, plus cess. This tax treatment makes long-term holding of IPO stocks a potentially attractive option for those looking to benefit from capital appreciation over time.

Offset and Carry Forward of Losses

Investors should also be aware of the provisions for offsetting capital losses. In the case of a short-term capital loss, this can be offset against other capital gains (both short-term and long-term) within the same financial year. However, long-term capital losses can only be offset against long-term capital gains.

If investors are unable to utilize the full amount of their capital losses within the same year, they are allowed to carry forward the losses for up to eight years, provided the relevant income tax return has been filed for the year in which the loss occurred. This flexibility allows investors to reduce their tax liabilities in the future.

Conclusion

India’s exceptional performance in the IPO market in Q3 2024 underscores its growing importance in the global financial landscape. With 27 IPOs and US$ 4.27 billion in funds raised, the country's IPO sector is attracting both local and international investors. However, investors should be mindful of the tax implications associated with IPO gains, including short-term and long-term capital gains taxes and the rules for offsetting losses. Understanding these tax aspects can help investors maximize their returns and navigate the growing IPO landscape in India with confidence.

The Upcoming IPOs in this week and coming weeks are Rosmerta Digital, NTPC Green, Avanse Financial and Nisus Finance.

The Current active IPO are  Mangal Compusolution, Black Buck, and Onyx Biotec.

For more insights into financial trends , visit our Top News Headlines. You can also explore investment opportunities in the market and apply for upcoming IPOs through our Best IPO to Apply Now section.