Poojitha Raam Vinay 
Short-Term Capital Gains (STCG) on shares occur when equity shares or equity mutual funds are sold within 12 months. For AY 2025–26 (FY 2024‑25), STCG is taxable under Section 111A.
What Shall be the Rate of Tax for STCG for AY 2025–26?
With effect from 23rd July 2024, 20% flat rate on gains from listed equity shares and equity-oriented MF units sold in recognized stock exchanges, with STT paid. Along with 4% Health & Education Cess. This rate is applicable regardless of total income.
| Criteria | Rate |
| STT-paid listed equity transactions before 23rd July 2024 | 15% + 4% cess |
| STT-paid listed equity transactions after 23rd July 2024 | 20% + 4% cess |
| Non-STT / off-market transactions | Taxed at your income slab rate |
Computation of STCG
Gain = Sale Price – Purchase Price – STT/Applicable charges.
Example :
Transaction after 23rd July 2024
| Buy shares for ₹1,00,000 → Sell for ₹1,50,000 → Gain = ₹50,000 |
| Tax = 20% × ₹50,000 = ₹10,000 → + 4% cess → ₹10,400 |
Exemptions & Set-Off Rules
No exemption via Section 54/54F for securities.
Set-off allowed against STCG:
- First: Short-term losses (other assets/securities).
- Then: Long-term capital losses.
Unabsorbed losses can be carried forward up to 8 years.
Can the Assessee Claim Any Deductions?
Unfortunately, Section 80C deductions don’t apply to STCG under Section 111A.
Compliance & Reporting
- Report STCG in ITR Form ITR‑2 or ITR‑3, under “Capital Gains – Short-Term”.
- File within due date (usually July 31, for AY 2025-26 the due date is September 15, or October 31st with audit).
- Keep contract notes, Demat statements, STT & broker statements as proof.
Tax-Saving & Planning Tips
- Holding shares for >1 year to avail 10% LTCG exemption (above ₹1 Lakh).
- Selling loss-making shares to offset gains.
- Invest in index/infrastructure funds to diversify.
Points To Note
- STCG = Profit from shares/MFs sold <12 months.
- Flat 15% tax + 4% cess before 23rd July 2024 or 20% tax + 4% cess after 23rd July 2024 if STT is paid.
- Use loss set-offs smartly.
- Report gains in ITR with documentation.
- Plan exits wisely to reduce tax outgo.
Also Read - Share Market Taxation For AY 2024-25
FAQs
If the total annual income (including STCG) doesn't exceed the basic exemption threshol i.e ₹2.5 lakh for individuals under 60, ₹3 lakh for seniors, ₹5 lakh for super-seniors STCG up to that limit remains un-taxed.
For example, a resident under 60 earning ₹1.5 lakh salary + ₹1 lakh STCG = ₹2.5 lakh total—completely tax-free since it's within the ₹2.5 lakh slab .
Section 87A provides tax relief to resident individuals falling under lower income brackets. For FY 2024-25, Rs. 25,000 rebate is allowed for income within 7 lakhs under the new regime and Rs. 12,500 is allowed for income within 5 lakhs under the old regime.
Yes, they are taxed at your normal income slab rate. No longer exempt like before FY 2020–21.
No, TDS is deducted on short-term or long-term capital gains when you sell shares through stock exchanges. STT is a tax levied on the purchase and sale of securities in the stock market.
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