Short-Term Capital Gain (STCG) refers to the profit earned from the sale of a capital asset held for a short duration before being sold. In India, the holding period that defines a gain as “short-term” depends on the type of asset. For most assets like shares listed on a recognized stock exchange, mutual funds, and securities, the period is 12 months or less. For other assets like real estate or unlisted shares, the period is usually 24 or 36 months.
If the asset is sold within this short period, any profit made is considered a short-term capital gain and is taxable under the Income Tax Act.
STCG is important for business owners, investors, and entrepreneurs because it directly impacts how much tax they owe when selling assets like property, stocks, or business equipment. For instance, equity shares sold within a year attract an STCG tax of 15% (plus applicable cess and surcharge), provided securities transaction tax (STT) has been paid. For other assets, the gain is added to the individual’s income and taxed as per the applicable slab rates.
Understanding STCG is essential for accurate tax filings, especially during ITR season, and helps avoid notices or penalties from the Income Tax Department. It also helps in making informed decisions regarding investment timing and tax planning.
To ensure you meet all STCG-related compliance requirements, it's advisable to consult a tax expert or opt for a trusted income tax solution provider like FinTax24, which offers professional assistance tailored to your tax obligations.
By keeping track of your asset holding period and planning your sales accordingly, you can manage your tax liability more efficiently and stay compliant.