Short Term Capital Gain Tax FY 2025-26 — Rates by Asset Class, Section 111A & CalculationEquity 20% · Property Slab Rate · Budget 2024: 15%→20% · 87A Not Available · ITR-2 Filing

STCG Tax Rates — All Asset Classes at a Glance

Key Distinction: Section 111A STCG vs Slab-Rate STCG

• Section 111A STCG (20% flat): Listed equity shares and equity-oriented mutual funds sold on a recognized stock exchange with STT paid. Rate: flat 20% + 4% cess = 20.8% effective.

• Slab-rate STCG: All other assets — property, gold, debt MF, unlisted shares, bonds. Added to your total income and taxed at your applicable slab rate (5%, 20%, or 30% depending on total income).

• Critical difference: Section 111A STCG cannot benefit from Section 87A rebate — even if total income is below ₹12L. Slab-rate STCG is added to income and the full 87A rebate applies to the combined total (if within limits).

• No exemption limit for STCG: Unlike LTCG on equity (₹1.25L exempt per year under Section 112A), there is NO exemption limit for STCG — every rupee of STCG under 111A is taxed at 20%.

Which Transactions Are Covered Under Section 111A?

• Listed equity shares of a company listed on a recognized stock exchange in India, where Securities Transaction Tax (STT) has been paid on the sale.

• Units of equity-oriented mutual funds where at least 65% of the corpus is invested in listed equity shares, sold on a recognized stock exchange with STT paid.

• Units of business trusts (Infrastructure Investment Trusts, Real Estate Investment Trusts) listed and sold on a recognized stock exchange.

• IFSC transactions: Equity shares or equity MF units traded in an International Financial Services Centre (IFSC) with consideration in foreign currency — STT may not apply in IFSC.

• Holding period: All of the above qualify as STCG only if held for ≤ 12 months from date of purchase.

What Is NOT Covered by Section 111A (Taxed at Slab Rate Instead)?

• Listed equity shares sold off-market (without going through a stock exchange) — STT is not paid on such transfers.

• Equity shares received as gifts, inheritance, or ESOPs where STT was not paid on the original acquisition.

• Preference shares (even if listed) — not equity shares for 111A purposes.

• Foreign equity shares (US stocks, ADRs) — not listed on Indian exchanges.

• Unlisted equity shares — any company not listed on a recognized Indian exchange.

Section 111A Tax Calculation Rules

• Tax rate: 20% flat on net STCG (gross sale value minus cost of acquisition minus transfer expenses like brokerage, STT).

• No deductions: Chapter VI-A deductions (80C, 80D, NPS, etc.) cannot be set off against Section 111A STCG.

• No Section 87A rebate: Even if your total income is below ₹12L, Section 87A rebate does NOT apply to the 20% tax on 111A STCG.

• 4% cess applies: Health & Education Cess of 4% is added to the 20% tax — effective rate = 20.8%.

• Surcharge applies: If total income exceeds ₹50L — surcharge at applicable rate on the 111A tax component.

• Basic exemption adjustment (residents only): If your total ordinary income (salary, interest) is below the basic exemption limit (₹4L in new regime, ₹2.5L in old regime), the unutilised exemption can be applied against STCG to reduce the taxable STCG.

Basic Exemption Limit Adjustment — Resident Taxpayers Only

Resident individuals (not NRIs) can use the basic exemption limit shortfall to reduce their 111A STCG:

• How it works: If total ordinary income (salary, interest, rent) = ₹2L and basic exemption = ₹4L (new regime), the shortfall of ₹2L can be used to absorb ₹2L of STCG, making only the remaining STCG taxable at 20%.

• Example: Salary = ₹3L, STCG u/s 111A = ₹5L. New regime basic exemption = ₹4L. Shortfall = ₹4L - ₹3L = ₹1L. STCG adjusted = ₹5L - ₹1L = ₹4L taxable at 20% = ₹80,000 tax (+ cess).

• Not available for NRIs: Non-resident Indians must pay 20% on the full STCG with no basic exemption adjustment.

• Standard deduction first: The standard deduction of ₹75K (new regime) or ₹50K (old regime) reduces your ordinary income first before checking the basic exemption shortfall.

Holding Period — When Is Property Gain Short-Term?

• ≤ 24 months: Residential house, commercial property, land, or industrial plots held for 24 months or less from date of purchase = short-term capital asset.

• > 24 months: Same assets held for more than 24 months = long-term capital asset → LTCG at 12.5% without indexation (or 20% with indexation if purchased before July 23, 2024 — whichever is lower).

• Date of purchase: For inherited property, use the original owner's purchase date. For self-constructed property, use the date construction was completed.

• Under-construction flats: If you booked an under-construction flat and sell your booking (rights), the gain is from the date of booking payment, not possession.

How Is STCG on Property Calculated?

STCG on property is computed as:

• Full value of consideration (sale price): The actual price received or the stamp duty value (circle rate), whichever is higher.

• Less: Cost of acquisition — the actual purchase price (no indexation allowed for STCG, unlike LTCG on pre-July 24 property).

• Less: Cost of improvement — capital expenditure on renovations, additions made to the property (again, no indexation).

• Less: Transfer expenses — brokerage, stamp duty, registration fees paid on the sale, legal charges.

• = Short-term capital gain — added to total income and taxed at your slab rate.

STCG on Property — Illustration

No Exemption Available for STCG on Property

• Exemptions under Section 54 (invest in another house), Section 54EC (bonds), and Section 54F are available ONLY for LTCG on property — NOT for STCG.

• If you sell a property held for ≤ 24 months and want to save tax, the only option is to ensure your total income is within the lower slab rates — there is no reinvestment exemption.

• This is why many taxpayers hold property for at least 24 months before selling.

Mutual Fund STCG Tax Rates — Fund-Type Wise

SIP Investors — Each Instalment Has Its Own Purchase Date

• For SIP (Systematic Investment Plan) units, each monthly instalment is a separate purchase with its own acquisition date and holding period.

• STCG on SIP: If you redeem SIP units within 12 months of each instalment date (for equity MF), that instalment is STCG at 20%. Units held > 12 months from purchase date are LTCG.

• FIFO method: Mutual fund redemptions use FIFO (First In, First Out) — the oldest units are deemed sold first.

• Practical tip: Review each SIP instalment's purchase date before redemption to optimise between STCG (20%) and LTCG (12.5% above ₹1.25L) — LTCG may actually be better if gains are large.

• Form 64A / Capital Gains Statement: Your mutual fund house (AMC) provides a capital gains statement for all redemptions — download this from the AMC portal for ITR filing.

STCG Holding Period and Tax Rate — Gold Assets

Key Rules for Gold Capital Gains

• Sovereign Gold Bond at maturity is fully exempt: Redemption at the end of 8-year maturity period is exempt from capital gains tax under Section 47(viic). This makes SGB the most tax-efficient gold investment.

• SGB interest is taxable: The annual 2.5% interest on SGBs is fully taxable as 'income from other sources' at your slab rate — only the capital gain at maturity is exempt.

• Jewellery cost: For inherited jewellery, use the Fair Market Value as on April 1, 2001 (or actual cost if purchased after 2001) as the cost of acquisition.

• Making charges: Making charges for gold jewellery are included in the cost of acquisition — they reduce your capital gain when you sell.

Before and After Budget 2024

How to Handle Gains Split Across July 23, 2024 in FY 2024-25

• If you sold equity shares before July 23, 2024 → STCG taxed at 15% (effective rate 15.6% with cess).

• If you sold equity shares on or after July 23, 2024 → STCG taxed at 20% (effective rate 20.8% with cess).

• For FY 2025-26 (April 2025 onwards) — all STCG on equity is uniformly at 20%; no split calculation needed.

• For AY 2025-26 ITR (FY 2024-25): The ITR-2 Schedule CG has separate rows for gains before and after July 23, 2024 to apply the correct rate automatically.

Other Budget 2024 Capital Gains Changes

• LTCG on equity raised: LTCG rate on equity/equity MF u/s 112A increased from 10% to 12.5%; exemption limit raised from ₹1L to ₹1.25L per year.

• Property LTCG: For property purchased after July 23, 2024 — LTCG at 12.5% without indexation. For pre-July 23, 2024 acquisitions — choice between 20% with CII indexation or 12.5% without.

• Holding period for listed bonds: Reduced from 36 months to 24 months for LTCG classification.

• STT on F&O increased: STT on futures raised from 0.0125% to 0.02%; options from 0.0625% to 0.1% — does not directly affect STCG on equity delivery trades.

Example 1: STCG on Listed Equity Shares (Section 111A)

Example 2: 87A Rebate Interaction — STCG + Salary Income

This example shows why STCG u/s 111A can create tax liability even when total income is below ₹12L.

Example 3: STCG Loss Set-Off — Reducing Tax

Why 87A Rebate Is Unavailable on Section 111A STCG

• CBDT clarification: Section 87A states the rebate applies to 'income tax computed on total income'. However, for special-rate income (111A, 112A), the Supreme Court and CBDT have clarified that the rebate is applied ONLY against the tax on ordinary income (salary, interest, rent) — not against the flat-rate tax on capital gains.

• Order of application: 87A rebate is first applied to tax on ordinary income. Any remaining rebate balance (up to ₹60,000) cannot be used to offset Section 111A tax or Section 112A tax.

• Practical impact: A taxpayer with salary ₹5L (zero ordinary tax after 87A) + STCG ₹3L still pays ₹62,400 tax (20% + cess on ₹3L STCG) — despite having total income of only ₹8L.

• Not available for LTCG either: Same restriction applies to LTCG under Section 112A (equity LTCG) — 87A rebate cannot offset the 12.5% LTCG tax.

When Does the Basic Exemption Limit Help with STCG?

• The basic exemption limit (₹4L in new regime, ₹2.5L in old regime) CAN be used to absorb STCG — but only the shortfall (amount by which ordinary income falls below the basic exemption).

• Example: Retired person with no salary, interest income ₹1L only. New regime basic exemption = ₹4L. Shortfall = ₹3L. This ₹3L shortfall can be used to absorb ₹3L of STCG, making only the STCG above ₹3L taxable at 20%.

• NRIs: Basic exemption adjustment is NOT available for non-residents — full STCG is taxed at 20% regardless of total income level.

STCL Set-Off Rules

Carry Forward Rules

• Carry forward period: STCL can be carried forward for up to 8 assessment years from the year of loss.

• Must file ITR on time: To carry forward losses, you MUST file your ITR on or before the due date (July 31 for non-audit cases). Belated ITR does not allow loss carry forward.

• Can be set off only against capital gains: In future years, carried-forward STCL can only be set off against STCG or LTCG — not against salary or other income.

• Example: STCL of ₹2L in FY 2025-26. Carry forward to FY 2026-27. If STCG of ₹5L in FY 2026-27 → set off ₹2L → net STCG ₹3L → tax = ₹60,000 + cess (instead of ₹1,00,000 + cess on full ₹5L).

• Tax harvesting strategy: Consider booking STCL on loss-making equity positions before March 31 to set off against gains in the same year — reduces your tax liability without exiting the investment permanently (buy back after 30 days to reset cost).

Advance Tax Schedule for STCG

Special Rule for Equity STCG Advance Tax

• Under the proviso to Section 234C, for capital gains arising from sale of equity shares or equity-oriented MF units (Section 111A), the entire advance tax can be paid in the March 15 installment without any interest penalty for earlier installment shortfalls.

• This concession exists because stock market gains are unpredictable — you cannot accurately estimate them at June 15 or September 15.

• Important: This concession applies ONLY to the equity STCG component. Your other income (salary, interest) still follows the normal quarterly installment schedule.

• If you miss March 15 entirely: Interest under Section 234B (1% per month) applies on any shortfall in total advance tax paid vs 90% of assessed tax.

Which ITR Form for STCG?

How to Report STCG in ITR-2 — Step by Step

• Step 1: Gather capital gains statement — Download from broker (for equity shares) or AMC portal (for mutual funds). This shows each transaction with purchase date, sale date, cost, and sale price.

• Step 2: Fill Schedule CG — In ITR-2, go to 'Capital Gains' schedule. For equity STCG u/s 111A: use 'Short-term capital gains under Section 111A'. For property/gold: use 'Short-term capital gains (other than 111A)'.

• Step 3: Enter each transaction — Name of asset, purchase date, cost, sale date, sale value. The portal calculates gain automatically.

• Step 4: Set off losses — Enter any STCL from other assets in the loss set-off section. The portal reconciles automatically.

• Step 5: Advance tax credit — Enter advance tax paid by March 15 in the tax payment schedule.

• Step 6: Verify with AIS/Form 26AS — Cross-check your gains against the Annual Information Statement (AIS) on incometax.gov.in — the IT Department has your broker data and will match it with your filed return.

• Deadline: July 31, 2025 for non-audit ITR filers (FY 2025-26).

Documents Required for STCG ITR Filing

• Equity shares: Broker contract notes (buy and sell), Capital Gains Report from broker (Zerodha Tax P&L, Groww P&L report, etc.).

• Mutual funds: Capital Gains Statement from CAMS or KFintech (covers all MF houses) — download free from their portal using your PAN.

• Property: Sale deed, purchase deed, registry receipts, improvement cost receipts.

• Form 26AS / AIS: Confirm TDS deducted on property sale (TDS u/s 194IA is deducted by buyer at 1% if sale value ≥ ₹50L) — claim this TDS credit in ITR.