STCG

Short Term Capital Gains (STCG) is the profit earned from selling a capital asset before the prescribed minimum holding period for long-term classification. Since the asset is held for a shorter duration, it is taxed at higher rates than LTCG.

The classification of a gain as short-term or long-term depends on both the asset type and the holding period:

• Equity & equity mutual funds: Held ≤ 12 months → STCG (taxed at 20%)
• Real estate & unlisted shares: Held ≤ 24 months → STCG (taxed at slab rate)
• Debt funds, gold, other assets: Held ≤ 36 months → STCG (taxed at slab rate)

STCG on equity was revised from 15% to 20% in Budget 2024 (effective 23 July 2024). STCG on non-equity assets continues to be taxed at your income tax slab rate — which can be as high as 30% for those in the highest bracket.

STCG = Sale Price − Purchase Price − Transfer Expenses

Tax on equity STCG = STCG Amount × 20%

Tax on non-equity STCG = STCG Amount × Applicable Slab Rate

You bought 500 units of an equity mutual fund at ₹100 per unit (₹50,000 total) in January 2025. You sold all units in July 2025 at ₹130 per unit (₹65,000 total) — held for only 6 months.

• STCG = ₹65,000 − ₹50,000 = ₹15,000
• STCG tax = ₹15,000 × 20% = ₹3,000

If you had instead held these units until February 2026 (over 12 months) and they grew to ₹140 per unit:

• LTCG = ₹70,000 − ₹50,000 = ₹20,000
• Since ₹20,000 < ₹1.25 lakh exemption: LTCG tax = ₹0

Use the STCG calculator to compute your tax liability.

• Equity STCG: flat 20%, no slab benefit: Even if you are in the 0% or 5% tax slab, equity STCG is taxed at a flat 20%. This makes short-term equity trading tax-inefficient for low-income investors.
• Debt funds and slab rate: Since 1 April 2023, all debt mutual fund gains (regardless of holding period) are taxed at your slab rate — the earlier LTCG with indexation benefit was removed. This significantly reduced the tax efficiency of debt funds for high earners.
• Tax-loss harvesting: If you have unrealised losses in one stock and gains in another, you can sell both before year-end. The STCL offsets the STCG, reducing your net tax liability. You can then reinvest at the new (lower) price.
• Securities Transaction Tax (STT): When you sell equity shares or equity mutual funds on a stock exchange, STT is deducted at source. The 20% STCG rate applies only when STT has been paid — which is true for virtually all exchange transactions.
• Switching funds triggers STCG: Switching from one mutual fund to another (even within the same fund house) is treated as a redemption and fresh purchase. If the switched-out fund was held for less than 12 months, STCG applies.