What is the STCG tax rate on shares sold after July 22, 2024?

The STCG tax rate on listed equity shares and equity-oriented mutual fund units (where STT is paid) sold on or after July 23, 2024, is 20% under Section 111A.

Is STT deductible when calculating STCG on shares?

While brokerage and other direct transaction costs are typically deductible from the sale price, STT itself is a tax on the transaction that makes you eligible for the special rate under Section 111A. It's generally not listed as a separate deduction from the gain calculation for STCG u/s 111A, though it is an expense related to the transfer.

How is STCG on intraday trading taxed?

Profits from intraday trading are usually treated as speculative business income, not as capital gains. This income is added to your total income and taxed at your applicable slab rates.

Is there any STCG tax on shares if my total income is below the exemption limit?

For resident individuals, STCG covered under Section 111A can be adjusted against the basic exemption limit if other income is not sufficient to exhaust this limit. If, after such adjustment, your total income (including the adjusted STCG) remains below the taxable threshold, no tax might be payable. Other STCG (taxed at slab rates) is part of your total income, so if the total income is below the exemption limit, no tax is due.

What is the holding period for STCG on unlisted shares?

The holding period for gains on unlisted shares to be considered short-term is 24 months or less from the date of acquisition.

Can I set off STCL from shares against my salary income?

No, capital losses (both short-term and long-term) cannot be set off against salary income. STCL can only be set off against STCG or LTCG.

How is STCG on inherited shares calculated?

For inherited shares, the cost of acquisition is taken as the cost for which the previous owner acquired them. The holding period also includes the period for which the previous owner held the shares.

What if I receive shares as a gift? What is the STCG implication on sale?

Similar to inherited shares, if you receive shares as a gift, the cost of acquisition for you will be the cost to the previous owner. The holding period will also include the previous owner's holding period. Gift tax provisions might also apply at the time of receiving the gift, depending on the value and relationship with the donor.

Are the STCG rules different for Preference Shares vs. Equity Shares?

Generally, the tax treatment under Section 111A (20%/15% rate) applies to listed equity shares. If preference shares are listed and STT is paid on their transaction, they might also fall under similar treatment for STCG if specified. Unlisted preference shares would typically have their STCG taxed at slab rates.

Do I need to pay advance tax on STCG from shares?

Yes, if your estimated total tax liability for the financial year (including tax on STCG) is ₹10,000 or more, you are required to pay advance tax in installments.

Is STCG on shares taxed differently in the old vs. new tax regime?

STCG under Section 111A is taxed at a flat rate (20% for transactions from July 23, 2024, or 15% before that). This special rate is independent of whether you opt for the old or new tax regime. For other STCG that is taxed at slab rates (e.g., from unlisted shares), the slab rates applicable under your chosen regime (old or new) will apply.

What documents do I need to calculate and report STCG on shares?

You will need broker contract notes, consolidated broker statements, bank statements (to trace fund flows), your Demat account statement, and you should also refer to your Annual Information Statement (AIS) and Form 26AS.

What happens if I don't report STCG on shares?

Failure to report STCG accurately can lead to notices from the Income Tax Department, along with potential penalties for underreporting income and interest on the unpaid tax amount.

Is STCG on Equity Traded Funds (ETFs) taxed like equity shares?

Yes, STCG from equity-oriented ETFs (that invest a specified majority in domestic equity shares and are traded on stock exchanges with STT paid) is generally taxed similarly to equity shares under Section 111A.

Where can I find the latest official information on STCG tax rates?

The latest official information can be found on the Income Tax Department's website (www.incometax.gov.in) and in official budget documents and finance acts.

Short-Term Capital Gain Tax on Shares in India (FY 2024-25)

Bhavika Rajput
Jul 22
14 min read

The subject of Short-Term Capital Gains (STCG) on shares holds significant relevance for investors in India. This article will cover the definition of STCG, how to calculate it, the latest tax rates, particularly focusing on the crucial Budget 2024 changes, and compliance aspects. Understanding "short-term capital gain tax on shares" is paramount for managing investment returns effectively. Profits from selling shares can be a good source of income, but it's important to know about the taxes. This guide explains the "STCG on shares India," including the "new STCG tax rate shares" introduced. Please note, this article is for informational purposes; it's always a good idea to seek professional advice for your specific financial situation and for understanding your income tax obligations.

Table of Content

What is Short-Term Capital Gain (STCG) on Shares?
Budget 2024-25 Changes to STCG Tax on Shares
Holding Period for Determining Short-Term Capital Gains on Shares
How to Calculate Short-Term Capital Gain Tax on Shares
Applicable STCG Tax Rates on Shares (FY 2024-25 / AY 2025-26)
STCG Tax on Shares for NRIs (Non-Resident Indians)
Set-off and Carry Forward of Short-Term Capital Losses (STCL) from Shares
Can Basic Exemption Limit Be Used Against STCG on Shares?
Reporting STCG on Shares in Income Tax Return (ITR)
Important Considerations for STCG on Shares
Conclusion: Smart Investing Includes Smart Tax Planning
FAQ: Short-Term Capital Gain Tax on Shares

What is Short-Term Capital Gain (STCG) on Shares?

A "what is short term capital gain" query often arises for new investors. A capital asset, in the context of shares, includes both equity shares and preference shares. STCG arises when these shares result in a profit upon sale within a specific short-term holding period. For listed equity shares (shares traded on a stock exchange), this period is 12 months or less from the date of acquisition. For unlisted shares, the holding period to be considered short-term is 24 months or less. The "STCG meaning shares" essentially refers to the profit you make from selling shares quickly.

Securities Transaction Tax (STT) is a key factor. STT is a tax paid at the time of buying or selling listed equity shares on a recognized stock exchange in India. The applicability of STT is relevant for determining the tax rate on gains from listed shares. Understanding the "holding period for STCG on shares" and the role of "STT on shares" is fundamental for any equity investor.

Budget 2024-25 Changes to STCG Tax on Shares

The "Budget 2024 STCG shares" announcements brought pivotal changes. The Union Budget 2024-25, presented by the Finance Minister on July 23, 2024, significantly altered the STCG tax landscape for shares. The most critical change is the new STCG tax rate of 20% under Section 111A for listed equity shares and units of equity-oriented mutual funds where STT is paid. This "new STCG tax rate 20%" is an increase from the previous 15% rate. This new rate became effective for transactions made on or after July 23, 2024.

It's important to note that STCG on other assets, such as unlisted shares (not covered by specific provisions like Section 111A) or listed shares where STT is not paid (for example, in an off-market transaction), will generally continue to be taxed at the individual's applicable income tax slab rates.

For context, the Budget also saw a change in the Long-Term Capital Gains (LTCG) tax rate for specified assets to 12.5% (up from 10%), with the exemption limit for such LTCG increased to ₹1.25 lakh from ₹1 lakh. However, our main focus here remains the "STCG Section 111A updated rate" and other "capital gains tax changes India 2024". These changes underscore the government's evolving approach to capital market taxation.

Here's a comparison for STCG under Section 111A:

Pre-Budget 2024 (Transactions until July 22, 2024): Tax Rate was 15%
Post-Budget 2024 (Transactions on/after July 23, 2024): Tax Rate is 20%

For more details, you can refer to the latest Union Budget 2024 highlights or "Official Budget 2024-25 Announcements" from government sources.

Holding Period for Determining Short-Term Capital Gains on Shares

The "share holding period STCG" is a critical factor in determining how your gains will be taxed. The Income Tax Act specifies these periods clearly.

Listed Equity Shares & Equity-Oriented Mutual Funds: If you sell these investments within 12 months (or exactly 12 months) of acquiring them, the gain is considered short-term. This means for "STCG 12 months" is the threshold for these commonly traded assets where STT is paid.
Unlisted Shares: For shares that are not listed on a recognized stock exchange, the holding period to qualify as short-term is 24 months or less from the acquisition date. So, "STCG 24 months unlisted" is the rule here.

You calculate the holding period from the date you acquired the shares up to the date you sell them. This "how to calculate holding period for shares" is a straightforward date calculation.

Asset Type	Holding Period for STCG
Listed Equity Shares (STT paid)	≤ 12 Months
Equity-Oriented Mutual Fund Units (STT paid)	≤ 12 Months
Unlisted Shares	≤ 24 Months

How to Calculate Short-Term Capital Gain Tax on Shares

To "calculate STCG on shares," you follow a clear process outlined by income tax guidelines. The "STCG calculation formula India" is quite logical.

Determine Full Value of Consideration (Sale Price): This is the total amount you received from selling the shares.
Deduct Expenses on Sale: You can deduct expenses directly related to the sale. This usually includes brokerage charges and other transaction costs like stamp duty. It's important to clarify the role of STT here. While STT payment is a condition for the concessional 20% (or previous 15%) rate under Section 111A, STT itself is generally not deducted from the sale consideration when calculating STCG under this section, as it's viewed as a levy on the transaction itself. However, other direct selling expenses are typically deductible.
Deduct Cost of Acquisition (Purchase Price): This is the price you originally paid to buy the shares.
Deduct Cost of Improvement (if any): This is usually not applicable for shares, but it refers to any capital expenditure incurred to enhance the value of the asset.
Result is STCG: The amount remaining after these deductions is your Short-Term Capital Gain.
Apply the Applicable Tax Rate: You then apply the relevant STCG tax rate (e.g., 20% under Section 111A for relevant transactions post-July 23, 2024, or slab rates for others).

The formula is: STCG = Full Sale Consideration - (Cost of Acquisition + Expenses on Sale)

Let's look at some examples for a "short term capital gain tax calculator shares" scenario:

Example 1 (Post-Budget 2024): Sale of listed equity shares (STT paid) after July 23, 2024

Shares Purchased: 100 shares at ₹100 each (Cost of Acquisition = ₹10,000)
Shares Sold: 100 shares at ₹130 each (Sale Price = ₹13,000) on August 5, 2024
Brokerage Paid on Sale: ₹50
STCG = ₹13,000 - (₹10,000 + ₹50) = ₹2,950
Tax Rate (u/s 111A, STT paid, sale after July 23, 2024): 20%
STCG Tax = 20% of ₹2,950 = ₹590 (plus applicable surcharge and cess)

Example 2 (Pre-Budget 2024): Sale of listed equity shares (STT paid) before July 23, 2024

Shares Purchased: 100 shares at ₹100 each (Cost of Acquisition = ₹10,000)
Shares Sold: 100 shares at ₹120 each (Sale Price = ₹12,000) on June 10, 2024
Brokerage Paid on Sale: ₹40
STCG = ₹12,000 - (₹10,000 + ₹40) = ₹1,960
Tax Rate (u/s 111A, STT paid, sale before July 23, 2024): 15%
STCG Tax = 15% of ₹1,960 = ₹294 (plus applicable surcharge and cess)

Example 3 (Unlisted Shares): Sale of unlisted shares

Shares Purchased: 50 shares at ₹200 each (Cost of Acquisition = ₹10,000)
Shares Sold: 50 shares at ₹280 each (Sale Price = ₹14,000) after 18 months (within 24 months)
Expenses on Sale: ₹100
STCG = ₹14,000 - (₹10,000 + ₹100) = ₹3,900
Tax Rate: This ₹3,900 will be added to the individual's total income and taxed at their applicable income tax slab rate.

Applicable STCG Tax Rates on Shares (FY 2024-25 / AY 2025-26)

Understanding the “STCG tax rate shares India 2024-25" is crucial for accurate tax computation. The rates depend on the nature of the shares and the transaction.

STCG under Section 111A: This "Section 111A tax rate" applies to profits from selling listed equity shares on a stock exchange (where STT is paid) or units of an equity-oriented mutual fund or units of a business trust (where STT is paid).
For transactions on or after July 23, 2024: The rate is 20%.
For transactions before July 23, 2024 (within FY 2024-25): The rate was 15%.
STCG on Other Shares: This includes gains from:
Unlisted shares (held for 24 months or less).
Listed equity shares where STT is not paid (e.g., off-market transactions or shares bought in an IPO and sold before listing where STT might not apply on acquisition).
These gains are added to your total income and taxed at your applicable income tax slab rates. The "STCG slab rate" will depend on your total taxable income.

Over and above these rates, a surcharge (if your income is above certain thresholds) and health and education cess (currently 4%) will also apply.

Type of Share Transaction	STCG Tax Rate (FY 2024-25)	Conditions
Listed Equity Shares / Eq. Oriented MF (STT paid) - Sale on/after July 23, 2024	20% (+ surcharge & cess)	Section 111A
Listed Equity Shares / Eq. Oriented MF (STT paid) - Sale before July 23, 2024	15% (+ surcharge & cess)	Section 111A
Unlisted Shares / Listed Shares where STT not paid (e.g., off-market transactions)	Applicable Income Tax Slab Rate (+ surcharge & cess)	Taxed as regular short-term capital gains

To understand your slab rate, you can check the current income tax slab rates.

STCG Tax on Shares for NRIs (Non-Resident Indians)

The "STCG on shares for NRI" investors also has specific rules. For Non-Resident Indians (NRIs), STCG from Indian shares is taxable in India.

STCG under Section 111A (listed equity shares/equity-oriented MFs with STT paid):
For transactions on or after July 23, 2024: Taxed at 20%.
For transactions before July 23, 2024: Taxed at 15%.
Basic Exemption Limit: Generally, NRIs cannot adjust STCG covered under Section 111A against the basic exemption limit available to resident individuals.
Other STCG (e.g., unlisted shares, or listed shares without STT): These gains for NRIs are typically taxed at applicable slab rates for NRIs or specific rates if mentioned. For unlisted shares, STCG is often taxed at slab rates.
Double Taxation Avoidance Agreement (DTAA): NRIs should check the DTAA between India and their country of residence. A DTAA might provide relief from double taxation or offer a specific beneficial rate.

Tax rules for NRIs can be quite intricate, and checking DTAA provisions is advisable. For more comprehensive information, you might look into taxation rules for NRIs.

Set-off and Carry Forward of Short-Term Capital Losses (STCL) from Shares

Rules to "set off STCL from shares" are important for managing overall tax liability. If you incur a Short-Term Capital Loss (STCL) from selling shares, you can set it off.

Set-off in the Same Year: STCL can be set off against any Short-Term Capital Gain (STCG) or Long-Term Capital Gain (LTCG) you have earned in the same assessment year.
Carry Forward: If you cannot fully set off the STCL in the same year, the unabsorbed loss can be carried forward for up to 8 assessment years immediately following the year the loss was incurred.
Set-off in Subsequent Years: In the following years, this carried-forward STCL can only be set off against STCG or LTCG.
The rules for setting off STCL from shares (whether under Section 111A or other types) are generally similar to other STCL. You cannot set off capital losses against salary income or income from other heads.

Understanding "how to adjust STCL" and the "STCG loss set off rules" can significantly reduce your tax outgo. You can learn more about set-off and carry forward of losses.

Can Basic Exemption Limit Be Used Against STCG on Shares?

The question of "STCG basic exemption limit" adjustment is common. Here’s how it works:

Resident Individuals and HUFs: Resident individuals and Hindu Undivided Families (HUFs) can adjust STCG falling under Section 111A (from listed equity shares/equity MFs with STT paid) against their basic exemption limit. This is possible only if their total taxable income (after claiming other eligible deductions and adjusting other incomes) is below the basic exemption limit. The STCG is used to exhaust the remaining unutilized portion of the exemption limit.
NRIs: As mentioned earlier, Non-Resident Indians generally cannot use the basic exemption limit to adjust STCG taxable under Section 111A.
STCG Other Than Section 111A: Short-term capital gains that are not covered under Section 111A (e.g., from unlisted shares or listed shares where STT is not paid) are taxed at the applicable slab rates. These gains form part of your total income, which is naturally subject to the basic exemption limit.

Knowing "can I adjust STCG against exemption" helps in correctly calculating your tax. You can find information on current basic exemption limits on relevant tax pages.

Reporting STCG on Shares in Income Tax Return (ITR)

You need to "report STCG in ITR" accurately. Short-Term Capital Gains from shares must be reported in your Income Tax Return.

ITR Forms: Typically, individuals with capital gains income (who do not have business income) will use ITR-2. If you have business income as well, you might need to file ITR-3.
Schedule CG: Details of all capital gains (both short-term and long-term) are reported in Schedule CG (Capital Gains) of the ITR form. You need to provide scrip-wise details for certain transactions.
Reconciliation: It's crucial to reconcile the capital gains figures with your broker statements, Form 26AS (Annual Tax Statement), and the Annual Information Statement (AIS). AIS provides a comprehensive view of your financial transactions reported by various entities.
Accurate reporting is essential to avoid scrutiny or notices from the Income Tax Department.

For assistance, you can "file your income tax return" through platforms like Taxbuddy or consult "Taxbuddy ITR filing services." Also, the "Income Tax Department portal" (https://www.incometax.gov.in/iec/foportal/) is the official resource for ITR forms and filing.

Important Considerations for STCG on Shares

There are several other "important considerations for STCG on shares" that investors should keep in mind.

Securities Transaction Tax (STT): As reiterated, "STT and STCG" are linked for the special 20%/15% tax rate under Section 111A. STT is a tax levied on the value of securities transacted through a recognized stock exchange. Payment of STT is a prerequisite for availing the concessional tax rate on STCG from listed equity shares.
Advance Tax: If your total tax liability for the year (including tax on STCG) is likely to be ₹10,000 or more, you are liable to pay advance tax in installments during the financial year itself. This includes "advance tax on capital gains shares."
Deductions under Chapter VI-A (Sec 80C to 80U): Deductions under sections like 80C (for investments in PPF, ELSS, life insurance, etc.) up to 80U are not available against STCG taxed under Section 111A (the 20%/15% category). However, these "deductions against STCG" can be claimed against STCG that is taxed at normal slab rates (e.g., from unlisted shares).
Bonus Shares/Rights Issues: For "STCG bonus shares," the cost of acquisition for bonus shares allotted after April 1, 2001, is usually taken as nil. The holding period starts from the date of allotment of the bonus shares. For rights issues, the cost is what you paid for them, and the holding period starts from their allotment date. These rules can affect your STCG calculation.
Tax Loss Harvesting: This involves selling shares at a loss to offset gains, thereby reducing overall taxable income. You can potentially use this strategy for STCG as well, subject to tax rules.

These practical tips can help in better tax management. You can "learn more about advance tax" or "deductions under Section 80C" from dedicated resources.

Conclusion: Smart Investing Includes Smart Tax Planning

To wrap it up, understanding "STCG tax planning" is a vital part of investing in shares. We've seen that Short-Term Capital Gain (STCG) refers to profits from selling shares held for a short period. The holding period is key – 12 months for listed equity and 24 months for unlisted shares define 'short-term'. The critical Budget 2024 update brought a new STCG tax rate of 20% under Section 111A for relevant transactions from July 23, 2024. Knowing how to calculate and report these gains is essential for every investor in India. Managing your "share investment tax India" effectively ensures you comply with the law and optimize your returns. Smart investing isn't just about picking the right shares; it’s also about astute tax planning.

For personalized guidance on your tax situation and ITR filing, it's always best to seek professional help. You can Contact Taxbuddy for expert tax advice.

FAQ: Short-Term Capital Gain Tax on Shares

What is the STCG tax rate on shares sold after July 22, 2024?
The STCG tax rate on listed equity shares and equity-oriented mutual fund units (where STT is paid) sold on or after July 23, 2024, is 20% under Section 111A.
Is STT deductible when calculating STCG on shares?
While brokerage and other direct transaction costs are typically deductible from the sale price, STT itself is a tax on the transaction that makes you eligible for the special rate under Section 111A. It's generally not listed as a separate deduction from the gain calculation for STCG u/s 111A, though it is an expense related to the transfer.
How is STCG on intraday trading taxed?
Profits from intraday trading are usually treated as speculative business income, not as capital gains. This income is added to your total income and taxed at your applicable slab rates.
Is there any STCG tax on shares if my total income is below the exemption limit?
For resident individuals, STCG covered under Section 111A can be adjusted against the basic exemption limit if other income is not sufficient to exhaust this limit. If, after such adjustment, your total income (including the adjusted STCG) remains below the taxable threshold, no tax might be payable. Other STCG (taxed at slab rates) is part of your total income, so if the total income is below the exemption limit, no tax is due.
What is the holding period for STCG on unlisted shares?
The holding period for gains on unlisted shares to be considered short-term is 24 months or less from the date of acquisition.
Can I set off STCL from shares against my salary income?
No, capital losses (both short-term and long-term) cannot be set off against salary income. STCL can only be set off against STCG or LTCG.
How is STCG on inherited shares calculated?
For inherited shares, the cost of acquisition is taken as the cost for which the previous owner acquired them. The holding period also includes the period for which the previous owner held the shares.
What if I receive shares as a gift? What is the STCG implication on sale?
Similar to inherited shares, if you receive shares as a gift, the cost of acquisition for you will be the cost to the previous owner. The holding period will also include the previous owner's holding period. Gift tax provisions might also apply at the time of receiving the gift, depending on the value and relationship with the donor.
Are the STCG rules different for Preference Shares vs. Equity Shares?
Generally, the tax treatment under Section 111A (20%/15% rate) applies to listed equity shares. If preference shares are listed and STT is paid on their transaction, they might also fall under similar treatment for STCG if specified. Unlisted preference shares would typically have their STCG taxed at slab rates.
Do I need to pay advance tax on STCG from shares?
Yes, if your estimated total tax liability for the financial year (including tax on STCG) is ₹10,000 or more, you are required to pay advance tax in installments.
Is STCG on shares taxed differently in the old vs. new tax regime?
STCG under Section 111A is taxed at a flat rate (20% for transactions from July 23, 2024, or 15% before that). This special rate is independent of whether you opt for the old or new tax regime. For other STCG that is taxed at slab rates (e.g., from unlisted shares), the slab rates applicable under your chosen regime (old or new) will apply.
What documents do I need to calculate and report STCG on shares?
You will need broker contract notes, consolidated broker statements, bank statements (to trace fund flows), your Demat account statement, and you should also refer to your Annual Information Statement (AIS) and Form 26AS.
What happens if I don't report STCG on shares?
Failure to report STCG accurately can lead to notices from the Income Tax Department, along with potential penalties for underreporting income and interest on the unpaid tax amount.
Is STCG on Equity Traded Funds (ETFs) taxed like equity shares?
Yes, STCG from equity-oriented ETFs (that invest a specified majority in domestic equity shares and are traded on stock exchanges with STT paid) is generally taxed similarly to equity shares under Section 111A.
Where can I find the latest official information on STCG tax rates?
The latest official information can be found on the Income Tax Department's website (www.incometax.gov.in) and in official budget documents and finance acts.

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