What is Short-Term Capital Gains (STCG)?

The short-term capital gains are the profit that you earn through selling the holding capital assets for a period of 24 months or 12 months for the listed equity shares and equity mutual funds. They are taxed at the applicable tax rate of 20% for the most equity shares and mutual funds. 

What is are Tax Rate for the Short-term Capital Gains?

The tax rate for the short-term capital gains depends on the type of assets that are being sold. Here are the tax rates for the various types of assets: 

For the assets, which include listed equity shares, equity-oriented mutual funds, they will be charged for the short-term capital gains under section 111A if the STCG is paid at a 20% tax rate. 

The other types of assets, which include real estate and unlisted shares, are taxed under the normal income tax slab rates.

Tax Implications of the Short-term Capital Gains

Here are the specifications of the taxation on the short-term capital gains: 

Short-term capital gains on NRIs 

• The benefit of the exemption for the equity listed shares and mutual funds is not available to the NRIs under section 111A for the short-term capital gains. 

• From the short captain gains the TDS needs to be deducted from the earnings by the NRI. 
• An NRI can claim the double taxation benefits under the DTAA. 

STCG on the shares 

• If the assets or shares are held for less than 12 months the it will be considered as the short-term capital gains. 

• List of securities that are less than 12 months is also considered as the short-term capital gains.
• If the unlisted equity shares are held for less than 24 months, then they will be considered as short-term capital gains. 

Short-term capital gains on property

• You can have short-term capital gains from the sale of a property for less than 24 months. 

• The short-term capital gains will be applicable same to the same income tax rates. 
• There will be no indexation benefits on the short-term capital gains on the property.  

Short-Term Capital Gain on the Mutual Funds 

• There will be some specified mutual funds that will be taxed as short-term capital gains, apart from the holding period.

•  Short-term capital gains will be taxed as per the applicable slab rates. 
• Here are some of the mutual funds, which are defined as the mutual funds: 

1. The mutual funds that have 65% of their assets invested in money market instruments and debts. 
2. Whose 65% assets are invested in the funds. 

Short-Term Capital Gains on Bonds and Debentures

• Any capital gains from the transfer of a market-linked debenture would always be deemed to arise from the transfer of the short-term capital assets, regardless of the holding period. 

• Capital gains from the sale of unlisted debentures and unlisted bonds. 
• The assets are taxable according to the taxable slab rates, regardless of the holding period. 

Short-term capital gains on inherited assets  

• The capital gains for the calculations of the gifts and inheritance are hed, by the previous owner, which is considered fir t taxation purposes. 

• The short-term capital gains do not arise for the inherited assets. 
• For the gifts, the shirt term capital gains can arise, and the long-term capital gains holding period should be considered, and it needs to be determined whether it is a short-term or long-term.