Short-term capital gain
Also called: short term capital gain, STCG
Profit from selling listed shares or equity funds held for 12 months or less. Taxed at 20 percent plus cess, with no yearly exemption.
Sell a listed share within twelve months of buying it and the profit is a short-term capital gain. For sales on or after 23 July 2024 the rate is 20 percent, up from 15 percent before that, plus the 4 percent health and education cess. Short-term gains get no yearly exemption.
A short-term loss is more flexible than a long-term one. It can be set off against both short-term and long-term gains, and whatever is left carries forward for eight years if you file your return on time.
Example
You buy shares for 2 lakh rupees in January and sell them for 2.5 lakh in October of the same year. The 50,000 rupee gain is short-term, so the tax is 10,000 rupees plus 400 of cess.
Watch out
A few more weeks of patience can change the bill a lot. The same 50,000 gain held past twelve months would fall under the long-term rules, and within the yearly exemption it could cost nothing.
Learn it properly in
Chapter 3.1: Capital gains tax on Indian shares: STCG, LTCG and the rules after July 2024