STCG Short-Term Capital Gains Tax Under ITA 2025: Rates, Computation and Set-Off

Short-Term Capital Gains (STCG) arise when a capital asset is sold within the prescribed holding period. The tax treatment under ITA 2025 varies based on the asset class — equity shares attract a special 20% rate while most other assets are taxed at the individual's normal slab rate.

Holding Periods for Short-Term Classification

STCG Tax Rates

• Listed equity / equity MF (STT paid): 20%
• Property, unlisted shares, gold, other assets: Slab rate (added to total income)
• VDA/Crypto: 30% flat (always, regardless of holding)

Computation of STCG

1. Sale consideration
2. Less: Transfer expenses (brokerage, registration)
3. Less: Cost of acquisition (purchase price)
4. Less: Cost of improvement
5. = Short-Term Capital Gain

Note: For STCG (unlike LTCG), there is no indexation even if applicable — but indexation only applies to LTCG on property historically, and ITA 2025 removes it entirely.

STCG on Property — Slab Rate Implications

If you sell a house purchased 20 months ago, the gain is STCG (held less than 24 months) and added to your regular income, potentially pushing you into the 20% or 25% slab. This is why timing of property sales matters — waiting 24 months converts STCG to LTCG at 12.5%.

Set-Off of STCG Against Other Losses

• STCG can be set off against STCL (short-term capital loss) from any asset
• STCG can be set off against LTCL — NO. LTCL cannot reduce STCG.
• STCG cannot be set off against business losses or house property losses
• Unabsorbed STCL carries forward for 8 Tax Years

Advance Tax on STCG

STCG is included in total income for advance tax purposes. If significant STCG arises in Q3 or Q4, advance tax should be paid by 15 December or 15 March respectively to avoid interest under ITA 2025.

Reporting STCG in ITR

STCG is reported in Schedule CG of ITR-2 or ITR-3. Equity STCG (20% rate) and non-equity STCG (slab rate) are reported separately. Brokers issue the Capital Gains Report which can be imported into ITR.