13.1What is short-term capital gains (STCG) tax?
Time-sensitive: STCG at 20% applies to transfers on or after 23 July 2024. Checked November 2026 for FY 2026-27. Verify on incometaxindia.gov.in, NSE, BSE or SEBI before filing or trading. Rules and rates change, so check the official source before acting.
1What is it?
Tax on profit from selling listed equity shares or equity mutual fund units held for 12 months or less, where STT was paid.
2Why does it exist?
Short-term gains are taxed at a higher flat rate to encourage long-term holding.
3Calculation
STCG tax = Gain × 20% (+ 4% cess)
- Bought ₹50,000 of shares; sold after 7 months for ₹60,000.
- Gain = ₹10,000.
- Tax = ₹10,000 × 20% = ₹2,000 + cess ₹80 = ₹2,080.
STCG tax ≈ ₹2,080.
4Quick revision
- Held ≤ 12 months.
- 20% flat (+ cess).
- No basic exemption beyond the normal slab rules.
5Knowledge check
Q1. STCG rate on listed equity?Show answer
20% (+ cess).
Q2. Holding period for STCG?Show answer
12 months or less.
Q3. Gain ₹25,000 STCG. Tax before cess?Show answer
₹5,000.