Short-Term Capital Gains Tax Rate

Current STCG tax rates at a glance

Health and Education Cess at 4% is generally added to the calculated tax. Surcharge may also apply when total income crosses the prescribed thresholds.

The Income Tax Department confirms that eligible listed-equity STCG is taxed at 20% for transfers taking place on or after 23 July 2024. The previous rate was 15%. See the department’s official capital-gains guidance.

Is STCG taxed at a flat rate or slab rate?

Short-term capital gains fall into two broad categories.

Special-rate STCG

The 20% special rate generally applies to eligible short-term gains arising from:

• Listed equity shares
• Units of equity-oriented mutual funds
• Units of business trusts

The applicable Securities Transaction Tax conditions must be satisfied.

Under the Income-tax Act, 2025, the special-rate provision appears in Section 196. It corresponds to the provision commonly known as Section 111A under the earlier Income-tax Act, 1961.

Normal-rate STCG

Short-term gains from many other assets are added to the taxpayer’s income and taxed according to the applicable slab rate.

Common examples include:

• Land and buildings
• Gold and jewellery
• Unlisted shares
• Certain debt-oriented mutual funds
• Other non-equity investments
• Personal capital assets not covered by a special rate

For normal-rate STCG, the final rate can effectively range from nil to the highest applicable slab rate, depending on the taxpayer’s total income and tax regime.

STCG tax rate on listed shares

Listed equity shares held for 12 months or less are generally treated as short-term capital assets.

When the statutory conditions are satisfied, including applicable STT requirements, the short-term gain is generally taxed at 20%.

The transfer date determines the applicable rate. The date on which the shares were originally purchased does not preserve the earlier 15% rate.

For example, shares purchased in June 2024 and sold in August 2024 would be tested using the rate applicable on the August transfer date.

Learn more in our detailed guide to short-term capital gains tax on shares.

Section 196 and the earlier Section 111A

Taxpayers may see two section numbers used for listed-equity STCG.

Section 111A was the relevant provision under the Income-tax Act, 1961. The Income-tax Act, 2025 came into force on 1 April 2026 and replaced the earlier Act. The corresponding special-rate provision is now contained in Section 196.

Section 196 provides for a 20% rate on qualifying short-term gains from eligible equity shares, equity-oriented mutual-fund units and business-trust units where the STT requirements are satisfied.

The official provision is available on the Income Tax Department’s Section 196 page.

STCG tax rate on unlisted shares

An unlisted share held for 24 months or less is generally classified as a short-term capital asset.

The resulting gain is normally added to the taxpayer’s income and taxed at the applicable slab rate. The 20% special rate for eligible listed-equity transactions does not ordinarily apply.

Unlisted-share transfers may also involve:

• Fair-market-value rules
• Additional return disclosures
• Valuation requirements
• Foreign-asset reporting
• Non-resident taxation
• Closely held company provisions

A taxpayer who held unlisted equity shares during the year may need to provide additional information in the income-tax return, even if no sale took place.

STCG tax rate on equity mutual funds

Units of an eligible equity-oriented mutual fund held for 12 months or less are normally treated as short-term capital assets.

When the applicable conditions are met, the gain is generally taxed at 20%.

Example:

• Cost of units: ₹3,00,000
• Redemption value after ten months: ₹3,80,000
• Eligible transfer expenses: ₹2,000
• STCG: ₹78,000

Indicative tax:

₹16,224

This example assumes that the fund qualifies as an equity-oriented fund and the relevant transaction conditions are satisfied.

STCG tax rate on debt mutual funds

Debt and non-equity mutual funds require separate examination.

The applicable treatment may depend on:

• The scheme’s investment composition
• Whether it qualifies as a specified mutual fund
• The date the units were acquired
• The date the units were transferred
• The type of underlying investments
• Special deeming provisions

Certain specified mutual-fund gains are treated as short-term irrespective of the actual holding period and are generally taxed according to the applicable slab rate.

Do not rely only on words such as “debt,” “hybrid,” “international” or “fund of funds” in the scheme name. The scheme’s tax classification and portfolio composition must be checked.

STCG tax rate on property

Land or a building held for 24 months or less is generally classified as a short-term capital asset.

Short-term gain on property is normally added to the taxpayer’s other income and taxed according to the applicable slab rate. The 20% listed-equity rate does not apply.

The basic calculation is:

Sale consideration

Less: eligible transfer expenses

Less: cost of acquisition

Less: eligible cost of improvement

Equals: short-term capital gain

Indexation is generally not available when calculating STCG.

Eligible costs may include:

• Purchase consideration
• Stamp duty and registration expenses forming part of acquisition cost
• Qualifying improvement expenditure
• Brokerage paid on sale
• Legal expenses directly connected with the transfer

Every claimed cost should be supported by invoices, agreements or other reliable records.

Property STCG example

Assume:

• Sale consideration: ₹45,00,000
• Purchase cost and acquisition expenses: ₹37,00,000
• Eligible improvement cost: ₹2,00,000
• Eligible transfer expenses: ₹1,00,000

₹45,00,000 − ₹37,00,000 − ₹2,00,000 − ₹1,00,000

= ₹5,00,000 STCG

The ₹5,00,000 is generally added to the taxpayer’s other taxable income.

If the taxpayer’s salary and other income already place them in the 30% slab, the property STCG may also effectively be taxed at 30%, plus applicable surcharge and cess.

The final liability cannot be determined from the property gain alone. The taxpayer’s total income and chosen tax regime must also be considered.

STCG tax rate on gold and jewellery

Gold and jewellery held for 24 months or less will generally be treated as short-term capital assets.

The resulting gain is usually:

• Added to the taxpayer’s total income
• Taxed according to the applicable slab rate
• Subject to cess and applicable surcharge
• Calculated without indexation

Purchase invoices and sale records should be retained. Where inherited or gifted jewellery is sold, special cost and holding-period rules can apply.

Physical gold, gold ETFs, sovereign gold bonds and digital-gold arrangements should not automatically be treated in the same manner. Their legal structure and tax treatment may differ.

New tax regime slabs for AY 2026–27

For normal income under the new tax regime, the slabs for AY 2026–27 are:

These slabs may apply to normal-rate STCG, such as short-term gains from property, gold or unlisted shares.

They do not replace the separate 20% rate for eligible listed-share and equity-fund STCG.

The official slabs and rebate guidance are available on the Income Tax Department’s AY 2026–27 ITR-2 page.

STCG under the old tax regime

Under the old regime, normal-rate STCG is generally added to other income and taxed according to the applicable old-regime slabs.

The old-regime basic slabs for an individual below 60 years generally begin as follows:

Different basic exemption limits can apply to qualifying senior and super-senior citizens.

Eligible listed-equity STCG remains separately taxable at 20%, regardless of whether the taxpayer selects the old or new regime.

The choice between regimes should be based on the taxpayer’s complete income, deductions and circumstances—not only the amount of capital gain.

Basic exemption limit and STCG

A resident individual or HUF may, subject to the applicable conditions, use an unabsorbed portion of the basic exemption limit against special-rate STCG.

Example under the new regime:

• Normal income: ₹3,20,000
• Applicable basic exemption limit: ₹4,00,000
• Unused basic exemption: ₹80,000
• Eligible special-rate STCG: ₹1,50,000

Potential special-rate balance:

₹1,50,000 − ₹80,000

= ₹70,000

₹70,000 × 20%

= ₹14,000

₹14,000 × 4%

= ₹560

Indicative tax:

₹14,560

This relief is subject to taxpayer category, residential status, assessment period and statutory conditions.

Section 87A rebate and STCG

For AY 2026–27, an eligible resident individual under the new tax regime may claim a rebate of up to ₹60,000 when the prescribed total-income conditions are met.

However, the rebate cannot exceed the income tax calculated at the normal rates under the new regime. It therefore does not automatically eliminate tax payable on income taxed at special capital-gains rates.

Consider a taxpayer with:

• Normal taxable income: ₹8,00,000
• Eligible listed-share STCG: ₹2,00,000
• Total income: ₹10,00,000

The tax on normal income and tax on special-rate STCG must be calculated separately. The Section 87A rebate is restricted according to the applicable normal-rate tax calculation.

A taxpayer should not assume that listed-share STCG becomes tax-free merely because total income is below ₹12 lakh.

Can deductions reduce STCG?

The answer depends on whether the gain is taxed at a special rate or normal slab rates.

Special-rate STCG

Deductions under Sections 80C to 80U cannot generally be deducted directly from eligible listed-equity STCG taxed at the special rate.

For example, an additional Public Provident Fund or tax-saving investment cannot be deducted from the special-rate share STCG itself.

Normal-rate STCG

Normal-rate STCG forms part of gross total income. A deduction may affect taxable income under the old regime if:

• The taxpayer is eligible
• The conditions of the deduction are satisfied
• The deduction is not specifically restricted
• Sufficient eligible income is available

Most conventional deductions are unavailable under the new tax regime, subject to specified exceptions.

Cess and surcharge on STCG

Calculating the base rate is only the first step.

Health and Education Cess

A 4% cess is generally charged on:

Income tax + applicable surcharge

Example:

• Base STCG tax: ₹40,000
• Surcharge: Nil
• Cess: ₹1,600
• Total tax: ₹41,600

Surcharge

Surcharge may apply when total income exceeds the prescribed thresholds.

For certain capital-gains income, the maximum surcharge rate may be restricted. Marginal relief can also apply when the additional tax caused by crossing a threshold exceeds the additional income.

High-income cases should be calculated using the complete tax profile rather than applying a flat percentage to the capital gain.

Example: salary plus property STCG

Assume a taxpayer under the new regime has:

• Salary and other normal income: ₹14,00,000
• Property STCG: ₹5,00,000
• Total normal-rate income: ₹19,00,000

Because property STCG is normally taxed at slab rates, the ₹5,00,000 gain is added to the taxpayer’s other normal income.

The tax is calculated over the combined ₹19,00,000 according to the applicable slabs. The property gain is not taxed separately at 20%.

This differs from eligible listed-share STCG, which is generally taxed separately at the special rate.

Example: salary plus listed-share STCG

Assume:

• Salary and other normal income: ₹14,00,000
• Eligible listed-share STCG: ₹5,00,000

The computation has two parts:

Special-rate STCG tax:

₹5,00,000 × 20%

= ₹1,00,000

Cess and any applicable surcharge are calculated after combining the relevant tax components.

How capital losses affect the STCG rate calculation

Tax should be calculated after adjusting eligible capital losses.

A short-term capital loss can generally be adjusted against:

• Short-term capital gains
• Long-term capital gains

A long-term capital loss can generally be adjusted only against long-term capital gains.

Example:

• Eligible listed-share STCG: ₹3,00,000
• Short-term loss on another eligible investment: ₹1,00,000
• Net STCG: ₹2,00,000

Tax at 20% is calculated on the eligible net gain of ₹2,00,000, subject to the complete set-off rules.

Read our detailed guide to capital gain loss set-off rules before finalising the calculation.

How to identify the correct STCG rate

Follow these steps:

Common STCG rate mistakes

Applying 20% to every capital asset

The 20% rate is mainly relevant to qualifying listed equity, equity-oriented mutual-fund and business-trust transactions. Property, gold and unlisted-share STCG are generally taxed at slab rates.

Continuing to use the old 15% rate

The rate became 20% for eligible transfers made on or after 23 July 2024.

Applying slab rates to qualifying listed shares

Where all special-rate conditions are met, listed-equity STCG should ordinarily be calculated at the prescribed special rate.

Ignoring STT conditions

The 20% rate does not apply solely because a share is listed. The applicable transaction and STT requirements must also be satisfied.

Using the wrong holding period

Listed and unlisted assets can have different holding periods. Special deeming provisions may also override normal holding-period rules.

Treating all mutual funds alike

Equity-oriented funds, specified mutual funds and other non-equity funds can receive different tax treatment.

Applying Section 87A to special-rate tax

For AY 2026–27, the new-regime rebate is restricted to tax calculated at normal slab rates.

Forgetting cess

Health and Education Cess at 4% must generally be added after calculating income tax and surcharge.

Calculating tax before adjusting losses

Eligible capital losses should be considered before tax is calculated on the net capital gain.

Get help calculating your STCG tax rate

Applying the wrong STCG rate can lead to incorrect tax payments and defective reporting.

Easy Return can help you:

• Classify assets as short-term or long-term
• Separate special-rate and normal-rate gains
• Calculate gains from shares, mutual funds and property
• Adjust eligible capital losses
• Compare the old and new tax regimes
• Calculate surcharge and cess
• Report capital gains in the correct ITR

File your income-tax return with Easy Return or consult an Easy Return tax expert.