Any profit and gains arising from the transfer of capital assets held for a short period such as property, shares, bonds, vehicles, etc., shall be treated as Short Term Capital Gains. The tax rate of Short-Term Capital Gains on listed equity shares, equity-oriented funds and units of business trust is 20% and other assets are taxed at applicable slab rates.
Short-term capital gain is profit earned from the sale of capital assets held for a short period from the date of purchase. These assets include Movable properties, Shares, Gold, Securities, Mutual funds, bonds, and debentures.
As per the Income Tax Act, profit earned from the sale of capital assets is taxable under the heading "Capital Gain" of the Income Tax Act, and taxability of such profit depends on the holding period of the assets. Assets held for less than the specified period shall be considered short-term capital assets and taxed at the rate provided in sections 111 and 111A.
Capital Assets are classified as short term or long term based on holding period. The table below shows the holding period for different types of capital assets, which determines whether they are categorized as short-term or long-term.
Asset Type | Period of Holding for Determination of Short Term and Long Term | |
Transferred Before 23rd July 2024 | Transferred From 23rd July 2024 | |
| Up to 12 Months = STCG More than 12 Months = LTCG | Up to 12 Months = STCG More than 12 Months = LTCG |
| Up to 24 Months = STCG More than 24 Months = LTCG | Up to 24 Months = STCG More than 24 Months = LTCG |
Other Assets | Up to 36 Months = STCG More than 36 Months = LTCG | Up to 24 Months = STCG More than 24 Months = LTCG |
The Short-Term Capital Gain can be calculated as follows:
Particulars | Amount | Amount |
Full value of consideration | xxx | |
Less: Expenses incurred wholly and exclusively for such transfer | (xxx) | |
Net sale consideration | xxx | |
Less: Cost of acquisition | xxx | |
Less: Cost of improvement | xxx | |
Short-term Capital Gains(STCG) | xxx | |
Less: Exemptions under section 54B/54D | xxx | |
Short-Term Capital Gains chargeable to tax | xxx |
The short-term capital gain tax rate varies depending on the type of asset being sold. The tax rates applicable for different types of assets are as follows:
Asset Type | Short-Term Capital Gains Taxation | Tax Rate Before 23rd July 2024 | Tax Rate On or After 23rd July 2024 |
Listed Equity Shares & Equity-Oriented Mutual FundsListed Equity Shares & Equity-Oriented Mutual FundsListed Equity Shares & Equity-Oriented Mutual Funds | Taxed under Section 111A (if STT is paid) | 15% | 20% |
Other Assets (e.g., Real Estate, Land, Unlisted Shares)Other Assets (e.g., Real Estate, Land, Unlisted Shares) | Taxed at normal income tax slab rates applicable to the taxpayer | Slab rates | Slab rates |
Ravi bought a house in 2024 for Rs. 20,00,000. He sold it in 2025 for Rs. 65,00,000. Calculate the taxable capital gain.
Particulars | Amount | Amount |
Full value of consideration | 65,00,000 | |
Less: Expenses incurred wholly and exclusively for such transfer | Nil | |
Net sale consideration | 65,00,000 | |
Less: Cost of acquisition | 20,00,000 | |
Less: Cost of improvement | Nil | |
Short-term Capital Gains(LTCG) | 45,00,000 | |
Less: Exemptions under section 54B/54D | Nil | |
Short-Term Capital Gains chargeable to tax | 45,00,000 |
The following are the tax rates for Short-Term Capital Gains on mutual funds:
Transfer Before 23rd July 2024:
Transfer on or After 23rd July 2024:
Specified Mutual Funds has been defined as those mutual funds:
As the landscape of capital gains taxation is ever dynamic, given the market movements and government policies and plans, it is important to stay updated related to recent tax rates for error-free compliance and to avoid adverse consequences.