Short Term Capital Gain

Tax

Quick Definition

Short-Term Capital Gain (STCG) is the profit earned from selling a capital asset within a short holding period, usually less than 12 months for equity investments.

Detailed Explanation

Short-Term Capital Gain arises when you sell an asset within a short duration after purchase and make a profit. The holding period varies depending on the type of asset:

Holding Period (India)

  • Equity shares & equity mutual funds: Less than 1 year
  • Real estate/property: Less than 2 years
  • Debt funds & other assets: Less than 3 years

Taxation of STCG in India

  • Equity (with STT): Taxed at 15%
  • Other assets: Taxed as per income tax slab rates

Tax rules are governed by the Income Tax Department of India.

Key Points

  • Higher tax compared to long-term gains
  • Common in short-term trading or quick investments
  • Important for tax planning and profit calculation

Short-term gains are attractive for quick profits but come with higher tax liability and market risk.

Example

"You buy shares for ₹1,00,000 and sell them after 6 months for ₹1,20,000. The profit of ₹20,000 is considered Short-Term Capital Gain and taxed accordingly."

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