Section 111A —
STCG on Equity at 20%
Short-term capital gains on listed equity shares, equity mutual funds and business-trust units — the 20% rate since 23 July 2024, who it applies to, loss set-off, surcharge cap and how 111A differs from 112A.
Section 111A taxes short-term capital gains at a flat 20% on listed equity shares, equity-oriented mutual funds and units of business trusts (REITs/InvITs) sold on a recognised stock exchange with STT paid, when held for 12 months or less. The rate was raised from 15% to 20% by Budget 2024, effective 23 July 2024. Add 4% cess for an effective 20.8%. No Chapter VI-A deductions (80C etc.) and no indexation are allowed against this income.
What Section 111A Covers
Section 111A applies only to STT-paid, exchange-traded equity. Off-market or unlisted transfers, intraday and F&O fall outside it and are taxed differently.
| Asset / transaction | STT paid? | Section | STCG rate |
|---|---|---|---|
| Listed equity shares (NSE/BSE) | Yes | 111A | 20% |
| Equity-oriented mutual funds (>65% equity) | Yes | 111A | 20% |
| Equity ETFs (Nifty 50, Sensex) | Yes | 111A | 20% |
| Units of REITs / InvITs (on exchange) | Yes | 111A | 20% |
| Listed shares — off-market transfer | No | Normal | Slab |
| Unlisted / private equity shares | No | Normal | Slab |
| Intraday equity trading | Same-day | Speculative business | Slab |
| F&O (futures & options) | No | Non-spec. business | Slab |
| Debt mutual funds | — | Normal | Slab |
The 20% rate under Section 111A applies to sales on or after 23 July 2024; earlier sales in FY 2024-25 keep the old 15% rate. Under the Income-tax Act, 2025 (from AY 2026-27) the same relief is re-enacted as Section 196 — the popular "111A" reference still applies for the search intent.
A resident individual/HUF whose other income is below the basic exemption limit can set the shortfall against 111A gains before applying 20%. Example: if other income is ₹1.5L (old-regime limit ₹2.5L), ₹1L of the exemption can reduce the 111A taxable gain. Non-residents cannot use this adjustment.
Section 111A vs Section 112A
The same equity asset moves from 111A (short-term) to 112A (long-term) once you cross a 12-month holding period. The long-term route is taxed lower and carries a yearly exemption.
Section 111A · STCG
- Holding period 12 months or less
- Listed equity, equity MF, REIT/InvIT units (STT paid)
- No annual exemption — every rupee taxed
- No Chapter VI-A deductions, no indexation
Section 112A · LTCG
- Holding period more than 12 months
- Same STT-paid equity assets
- First ₹1.25 lakh of LTCG per year exempt
- No indexation; surcharge also capped at 15%
| Feature | Section 111A (STCG) | Section 112A (LTCG) |
|---|---|---|
| Holding period | 12 months or less | More than 12 months |
| Tax rate (since 23 Jul 2024) | 20% | 12.5% |
| Annual exemption | None | ₹1.25L |
| Chapter VI-A (80C etc.) | Not allowed | Not allowed |
| Indexation | No | No |
| Loss set-off | STCG & LTCG | LTCG only |
| Carry forward | 8 years | 8 years |
Both are STT-paid equity provisions and both cap surcharge at 15%.
Mixed short- and long-term equity sales this year? Get the 111A / 112A split and tax computed correctly.
File Capital-Gains ITR →Surcharge on Section 111A Gains
Surcharge on the tax charged under Section 111A (and 112A) is capped at 15%, unlike ordinary income where it can reach 25%–37%. This gives equity investors a meaningful edge at high income levels.
| Total income | Surcharge | Effective 111A rate |
|---|---|---|
| Up to ₹50 lakh | Nil | 20.80% |
| ₹50 lakh – ₹1 crore | 10% | 22.88% |
| ₹1 crore – ₹2 crore | 15% | 23.92% |
| Above ₹2 crore | 15% (capped) | 23.92% |
Rates include 4% health & education cess. Surcharge on 111A/112A income is capped at 15% even above ₹2 crore.
A Simple 111A Tax Calculation
STCG ₹4,00,000 · income under ₹50L
Same gain if held >12 months (112A)
In the example above, holding the same equity for one extra day beyond 12 months moves it from 111A (₹83,200) to 112A (₹35,750) — a lower rate plus a ₹1.25 lakh exemption. Always check your acquisition and sale dates before selling.
Loss Set-off & Carry-Forward under 111A
A short-term capital loss on equity can shelter other capital gains but never salary or business income. File the return by the due date to carry losses forward — see carry-forward of losses.
| Loss type | Can set off against | Carry forward |
|---|---|---|
| STCG loss (111A) | Any STCG + any LTCG (incl. 112A) | 8 years |
| LTCG loss (112A) | LTCG only | 8 years |
| STCG loss (111A) | Not against salary / business / house property | — |
Losses carry forward only if the ITR is filed on or before the due date under Section 139(1).
- Report 111A gains in Schedule CG of ITR-2 or ITR-3
- Use the broker/AMC capital-gains statement (STT paid confirmed)
- Split transactions before and on/after 23 July 2024 (15% vs 20%)
- Pay advance tax on capital gains to avoid 234B/234C interest
Section 111A — Frequently Asked Questions
Related TaxClue Services
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