Short-term capital gains (STCG) arise when you sell a capital asset within its short-term holding period. For listed equity shares and equity-oriented mutual funds held 12 months or less, STCG is taxed at 20% under Section 111A (raised from 15%, effective 23 July 2024) — STT must have been paid. For all other assets — property held ≤ 24 months, gold, unlisted shares, and debt mutual funds — STCG is added to your income and taxed at your applicable slab rate. Long-term equity gains are taxed at 12.5% under Section 112A.
STCG Tax Rates by Asset Type — AY 2026-27
The short-term holding period and rate depend entirely on the asset. Only listed equity and equity mutual funds get the special 20% flat rate under Section 111A; everything else is taxed at your slab.
| Asset | Short-term holding | STCG rate | Basis |
|---|---|---|---|
| Listed equity shares (BSE/NSE) | ≤ 12 months | 20% | Section 111A (STT paid) |
| Equity-oriented mutual funds (≥65% equity) | ≤ 12 months | 20% | Section 111A (STT paid) |
| Debt mutual funds (bought on/after 1 Apr 2023) | Any period | Slab | Deemed STCG — no LTCG benefit |
| Residential / commercial property | ≤ 24 months | Slab | Added to total income |
| Physical gold / gold ETF / gold MF | ≤ 24 months | Slab | Added to total income |
| Unlisted equity shares | ≤ 24 months | Slab | Added to total income |
| Listed bonds & debentures | ≤ 12 months | Slab | Added to total income |
STT must be paid at sale for the 20% Section 111A rate on equity; off-market transfers do not qualify. Rates verified on incometax.gov.in for FY 2025-26 (AY 2026-27).
Budget 2024 raised the Section 111A STCG rate on listed equity and equity mutual funds from 15% to 20% for transfers on or after 23 July 2024. For sales between 1 April 2024 and 22 July 2024 the old 15% applied; from 23 July 2024 onward the whole gain is taxed at 20%. This 20% rate continues for FY 2025-26.
STCG vs LTCG on Equity — Side by Side
STCG — held ≤ 12 months
- Section 111A flat 20% (STT paid)
- No basic-exemption cushion on the special rate
- No annual exemption like the ₹1.25 lakh
- Set off only against other capital gains
- Section 87A rebate does not apply
LTCG — held > 12 months
- Section 112A: 12.5% above ₹1.25 lakh/year
- First ₹1.25 lakh of gains exempt each year
- No indexation on equity
- Loss set off only against LTCG
- Holding period counted from purchase date
The single biggest lever is the 12-month holding line: crossing it drops the rate from 20% to 12.5% and unlocks the ₹1.25 lakh yearly exemption. Read the long-term side in our Section 112A and LTCG tax guides.
How STCG on Equity is Calculated
Suppose you sell listed shares held for 7 months with a short-term gain of ₹2,00,000 in FY 2025-26, and separately book a slab-rate STCG on gold.
111A STCG on equity
Slab STCG on gold
Add 4% health & education cess (and surcharge if applicable). Equity STCG at 20% is a flat special rate that does not merge with your slab, while gold/property STCG is simply added to income. Estimate the total with the income-tax calculator.
The Section 87A rebate (up to ₹25,000 in the new regime for income up to ₹7 lakh) does not apply to Section 111A STCG or Section 112A LTCG — these are special-rate gains. So even a small-income investor pays 20% on equity STCG. Compare regimes for the rest of your income in our new tax regime guide.
Debt Funds, F&O and Property — Special Rules
- Debt mutual funds bought on/after 1 April 2023 are always taxed at slab rates as deemed short-term gains — no LTCG rate and no indexation, regardless of holding period (Finance Act 2023). Units bought before 1 Apr 2023 and held over 24 months get 12.5% (no indexation).
- F&O (futures & options) is not capital gains at all — it is non-speculative business income taxed at slab rates, reported in ITR-3, with turnover computed on absolute profit/loss.
- Property held ≤ 24 months is short-term; the gain is added to income and taxed at slab. A long-term property gain (over 24 months) is 12.5% without indexation, with a 20%-with-indexation option only for property acquired before 23 July 2024.
- Unlisted shares and gold held ≤ 24 months are short-term at slab; held over 24 months they are long-term at 12.5% without indexation.
A Section 111A short-term loss can be set off against any capital gain (short or long), but Section 111A gains are taxed as a distinct block. A long-term loss, by contrast, can only be set off against long-term gains. Plan year-end booking accordingly.
STCG Loss Set-off & Carry Forward
- Short-term capital loss can be set off against any capital gain — short-term or long-term — in the same year.
- Long-term capital loss can be set off only against long-term capital gains, not against STCG.
- Unabsorbed capital losses (short or long) can be carried forward for 8 assessment years, set off only against capital gains.
- To carry a loss forward you must file your ITR by the due date; STCG is reported in Schedule CG of ITR-2 or ITR-3.
Tax-loss harvesting helps if
- You have taxable STCG this year
- You also hold loss-making shares you can book
- You want to reduce the 20% equity STCG bill
Be careful because
- Long-term losses cannot offset STCG
- The 87A rebate does not apply to 111A gains
- Off-market equity sales lose the 20% rate — taxed at slab u/s 112
Sold shares, property or gold this year? Get your capital gains computed and filed correctly.
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