What Is Short Term Capital Gain?
A Short Term Capital Gain (STCG) arises when you sell a capital asset and the holding period is shorter than the prescribed long-term threshold. Unlike Long Term Capital Gains (LTCG) which benefit from lower tax rates, STCG is generally taxed at higher rates — either at a special flat rate or at your applicable income tax slab rate, depending on the type of asset sold.
The concept of STCG is governed by Sections 2(42A), 111A, and 48 of the Income Tax Act, 1961.
| Listed Equity Shares / Equity MF | 20% (Section 111A) — held Ôëñ 12 months |
| Debt Mutual Funds (post-April 2023) | Slab rate (no LTCG benefit) |
| Immovable Property (house/plot) | Slab rate — held Ôëñ 24 months |
| Gold, Jewellery, Unlisted Shares | Slab rate — held Ôëñ 24 months |
| Surcharge Cap (111A assets) | 15% max surcharge on STCG under 111A |
Holding Period — When Is a Gain Short Term?
The holding period threshold that separates STCG from LTCG differs by asset class:
| Asset Class | STCG Holding Period | LTCG Holding Period |
|---|---|---|
| Listed equity shares (NSE/BSE) | Ôëñ 12 months | > 12 months |
| Equity-oriented mutual funds | Ôëñ 12 months | > 12 months |
| Listed bonds, NCDs, debentures | Ôëñ 12 months | > 12 months |
| Unlisted equity shares | Ôëñ 24 months | > 24 months |
| Immovable property (house, plot) | Ôëñ 24 months | > 24 months |
| Gold (physical, sovereign gold bond) | Ôëñ 24 months | > 24 months |
| Debt mutual funds (post-April 2023) | Always short term | Not applicable |
STCG Tax Rate Under Section 111A — Listed Equity and Equity MF
When you sell listed equity shares or equity-oriented mutual fund units (held for Ôëñ 12 months) through a recognised stock exchange and Securities Transaction Tax (STT) has been paid, the gain is taxed at a flat rate under Section 111A:
- Tax rate: 20% (increased from 15% w.e.f. 23 July 2024 — Budget 2024)
- Surcharge is capped at 15% regardless of total income
- Health and Education Cess: 4%
- Maximum effective rate: 20% × 1.15 × 1.04 = 23.92%
STCG Tax Rate on Other Assets — At Slab Rate
For assets not covered by Section 111A (property, gold, unlisted shares, debt funds), STCG is added to your total income and taxed at your applicable income tax slab rate:
| New Regime Slab (FY 2025-26) | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
How to Calculate STCG
STCG = Full Value of Consideration  Cost of Acquisition  Transfer Expenses
Note: Indexation (Cost Inflation Index adjustment) is NOT available for STCG — only for certain LTCG assets.
Example 1 — STCG on Listed Equity (Section 111A)
| Item | Amount |
|---|---|
| Sale price of 1,000 shares @ ₹250 | ₹2,50,000 |
| Purchase price of 1,000 shares @ ₹180 (8 months ago) | ₹1,80,000 |
| Brokerage at sale (0.1%) | ₹250 |
| STCG (Short Term Capital Gain) | ₹69,750 |
| Tax @ 20% under Section 111A | ₹13,950 |
Example 2 — STCG on Property (At Slab Rate)
| Item | Amount |
|---|---|
| Sale price of property (held 18 months) | ₹50,00,000 |
| Purchase price + stamp duty | ₹40,00,000 |
| Transfer expenses | ₹50,000 |
| STCG | ₹9,50,000 |
| Added to other income (say total ₹15 lakh) ÔåÆ taxed at 15% | ₹1,42,500 |
STCG on Mutual Funds — Category-wise
| MF Category | Short Term Period | STCG Rate |
|---|---|---|
| Equity MF ( 65% equity) |  12 months | 20% (Sec 111A) |
| Hybrid MF (30'65% equity) | Ôëñ 12 months | 20% (Sec 111A) |
| Debt MF (purchased after 1 April 2023) | Always short term | Slab rate |
| Debt MF (purchased before 1 April 2023) | Ôëñ 36 months | Slab rate |
| International / Fund of Funds | Ôëñ 24 months | Slab rate |
Set-Off and Carry Forward of STCG
Capital loss rules allow set-off of losses against gains, subject to restrictions:
- STCG can be set off against STCG from other assets in the same year
- STCG can be set off against LTCG (in the same year)
- STCG cannot be set off against ordinary income (salary, business income)
- Unadjusted STCG losses can be carried forward for 8 assessment years and set off against future capital gains
- Section 111A STCG cannot be set off against STCG from non-STT paid transactions
Basic Exemption Limit and STCG Under Section 111A
For resident individuals below 60 years, if total income (excluding Section 111A STCG) is below the basic exemption limit (₹3 lakh under new regime), the shortfall can be adjusted against the 111A STCG before applying the 20% rate.
Example: If other income = ₹1.5 lakh and STCG under 111A = ₹2 lakh, the remaining exemption of ₹1.5 lakh (= ₹3 lakh ÔêÆ ₹1.5 lakh) reduces taxable STCG to ₹50,000, on which 20% = ₹10,000.
ITR Form for Reporting STCG
- ITR-2 — for individuals and HUFs without business income who have capital gains (from equity, property, MF, etc.)
- ITR-3 — for individuals and HUFs with business income AND capital gains
- STCG under 111A is reported in Schedule 112A / CG of ITR-2/ITR-3
- STCG at slab rate is reported in the general capital gains schedule
Frequently Asked Questions — STCG Tax
What is the STCG tax rate on equity shares in FY 2025-26?
20% under Section 111A for listed equity shares and equity mutual fund units (held for Ôëñ 12 months), sold through a recognised stock exchange with STT paid. This rate was raised from 15% effective 23 July 2024.
Is STCG added to income for tax slab calculation?
Section 111A STCG is taxed at a flat 20% and is NOT clubbed with your regular income for slab rate purposes. However, STCG on other assets (property, gold, unlisted shares) IS added to total income and taxed at your slab rate.
Is intraday trading income STCG?
No. Intraday equity trading (where you buy and sell the same shares on the same day) is treated as speculative business income, not as short-term capital gain. It is taxed at slab rate under "income from business and profession" and is reported in Schedule BP of ITR-3.
Can NRIs claim the basic exemption on STCG under Section 111A?
No. Non-resident Indians (NRIs) cannot adjust the basic exemption limit against Section 111A STCG. The full Section 111A gain is taxed at 20% without any exemption limit benefit.
How long can I carry forward a STCG loss?
A short-term capital loss can be carried forward for 8 assessment years (i.e., 8 years from the end of the year in which the loss was incurred) and set off against future capital gains — both short-term and long-term.
Summary
Short Term Capital Gain tax in India is charged at 20% (Section 111A) for listed equity and equity MFs sold within 12 months, and at the applicable slab rate for property, gold, and other assets sold within 24 months. Debt mutual funds purchased after April 2023 are always taxed at slab rate regardless of holding period. STCG losses can be set off against STCG or LTCG in the same year and carried forward for 8 years. For high-income taxpayers, the 15% cap on surcharge for Section 111A gains is a key advantage that makes equity an efficient investment class from a tax perspective.