Short-Term Capital Gains (STCG)

Short-Term Capital Gains (STCG) refers to the profit earned from the sale of a capital asset held for a short period, as defined under the Income Tax Act. The holding period varies depending on the type of asset.

STCG is generally taxed at higher rates compared to long-term capital gains.

1. Holding Period for STCG

An asset is considered short-term if held for:

• Listed Equity Shares / Equity Mutual Funds: 12 months or less
• Immovable Property (land/building): 24 months or less
• Unlisted Shares: 24 months or less
• Other Assets (gold, etc.): 36 months or less

2. Tax Rates on STCG

• Equity Shares / Equity Mutual Funds (with STT paid):
  • Taxed at 15% under Section 111A
• Other Assets:
  • Taxed as per normal income tax slab rates

3. Calculation of STCG

Capital gain is calculated as:

$\text{STCG}=\text{Sale Consideration}-\text{Cost of Acquisition}-\text{Expenses on Transfer}$

(No indexation benefit is allowed)

4. Set-Off of Losses

• Short-term capital loss (STCL) can be set off against:
  • STCG
  • LTCG

This provides flexibility in tax planning.

5. Importance of STCG

• Impacts tax liability on short-term investments
• Important for traders and frequent investors
• Requires accurate classification and reporting

6. Common Mistakes

• Incorrect calculation of holding period
• Applying wrong tax rate
• Ignoring STT conditions
• Not reporting gains properly in ITR

Practical Insight

Most people focus on returns.

But in short-term investing:
👉 tax eats into profits significantly

Frequent buying and selling can:

• increase tax liability
• reduce net returns

So timing matters as much as profit.

How N D Savla & Associates Can Help

At N D Savla & Associates, we help you:

• Accurately compute capital gains
• Classify income correctly
• Optimise tax through planning and set-offs
• Ensure proper reporting in ITR