Short-Term Capital Gain
A capital gain on an asset held for less than the qualifying period, taxed at a higher rate than a long-term gain.
Formula
Test: listed equity or equity-oriented fund units held for 12 months or less; other assets have longer qualifying periods
Unit
₹
In depth
For listed equity on which securities transaction tax has been paid, gains on holdings of twelve months or less are short-term and taxed at a flat concessional rate under Section 111A, which was raised in the July 2024 amendments. No basic exemption applies to this gain for most taxpayers, and it cannot be reduced by indexation. The twelve-month boundary creates a real incentive to hold slightly longer, which is worth checking before selling near the anniversary. Short-term capital losses can be set off against both short-term and long-term gains, which makes them the more flexible loss to realise.
Worked example
A gain of ₹3,00,000 realised at month eleven is short-term. Held one more month it becomes long-term, where the first ₹1.25 lakh of aggregate long-term equity gains is exempt and the rate on the balance is lower.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Short-Term Capital Gain” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.