How Short-term Capital Gains are Taxed?

The tax rate levied on Short-term Capital gain has been divided into two categories:

A. Short-term Capital Gain covered under Section 111A

A tax of 15% (+ surcharge and cess) is charged on the following gains:

• Gain earned on the sale of listed equity shares.
• Gain earned on the sale of listed equity-oriented Mutual Funds.
• Gain earned on the sale of equity-oriented Mutual Funds, equity shares, or units of a recognized business trust.

NOTE:

1. To avail the benefit of the special tax rate under Section 111A, it is essential for an assessee to pay the Securities Transaction Tax (STT) at the time of selling the equity shares or mutual fund units.

2. No deduction under section 80C-80U is available for the short-term capital gains referred to in Section 111A.

B. Short-term Capital Gain not covered under Section 111A:

Any short-term gain that falls under this category is simply chargeable at a normal rate (falls under slab taxation).

• Gain earned on the sale of unlisted equity shares
• Gain earned on the sale of shares other than equity shares.
• Gain earned on the sale of debt-oriented Mutual Funds.
• Gain earned on the sale of debt securities, bonds, and government securities.
• Gain on any other short-term capital asset other than shares.