Short-Term Capital Gain (STCG) on Sale of Equity Shares

Short-Term Capital Gain (STCG) on Sale of Equity Shares is addressed under the Income-tax Act, 1961 as follows:

1. Definition:
   • STCG arises when equity shares listed on a recognized stock exchange are sold within 12 months of acquisition.
2. Tax Rate (Section 111A):
   • STCG on such equity shares is taxed at 15% (plus applicable surcharge and cess), provided the sale is subject to Securities Transaction Tax (STT) at the time of transfer.
3. Exemptions/Deductions:
   • No deduction under Chapter VI-A (like Section 80C) is allowed against such STCG.
   • Rebate under Section 87A is not available for STCG under Section 111A if total income includes such gains.
4. Loss Set-Off:
   • Short-term capital loss from such transactions can be set off against any capital gains (short or long-term).
   • It can be carried forward for 8 assessment years to be set off against future capital gains.
5. Tax Filing:
   • If the total income (including STCG) exceeds the basic exemption limit, tax must be paid and return filed.
   • Resident individuals with total income below the exemption limit (after including STCG) need not pay tax on STCG.

For the Financial Year 2024‑25 (Assessment Year 2025‑26), here’s the framework for short‑term capital gains (STCG) from the sale of equity shares (where STT was paid, and shares were listed):

🧾 1. Holding Period

• If listed equity shares are sold within 12 months of acquisition → classified as STCG under Section 111A.
  
  

2. Applicable Tax Rate (Section 111A)

Sale Date	STCG Tax Rate
On or before July 22, 2024	15 % + cess and surcharge
From July 23, 2024 onwards	20 % + cess and surcharge

3. Calculation Example

Scenario A – Sale on August 5, 2024 (after July 23):

• Purchase Price: ₹10,000
• Sale Value: ₹13,000
• Brokerage/Expenses: ₹50
• STCG = ₹13,000 − (₹10,000 + ₹50) = ₹2,950
• Tax = 20% × ₹2,950 = ₹590
  
  

Scenario B – Sale on July 10, 2024 (before July 23):

• Same numbers yield Tax = 15% × profit
  
  

4. Other Scenarios

• Unlisted equity shares, or listed shares sold off-market (no STT) → gains are taxed at individual slab rates, not under §111A.
  
  

5. Deductions, Set-offs & Filing

• No deductions (e.g. under Section 80C) can be claimed against STCG under §111A.
  
  
• Short‑term losses can be offset against any capital gains and carried forward for up to 8 assessment years.
• Under the new tax regime, for FY 2024‑25, Section 87A rebate could still be claimed if total income including STCG doesn’t exceed ₹7 lakh. However, this may change in future years.
  
  

✅ Summary — STCG Tax for FY 2024‑25

• If shares sold on or after July 23, 2024 → flat 20% STCG plus cess & surcharge.
• If shares sold on or before July 22, 2024 → flat 15% STCG plus cess & surcharge.
• Holding period threshold remains ≤12 months.
• Applicable only if transaction attracts STT.
• No other deductions allowed; losses can be carried forward.