Short Term Capital Gain (STCG) on listed equity shares refers to the profit earned from selling equity shares listed on a recognized stock exchange in India, where the holding period is less than 12 months. If such shares are sold within a year of purchase and result in a gain, the profit is categorized as a short-term capital gain under the Income Tax Act.
STCG on listed equity shares is taxed at a flat rate of 15%, plus applicable surcharge and cess, regardless of the taxpayer’s income slab. This concessional rate is provided under Section 111A of the Income Tax Act, 1961, provided that the transaction is subject to Securities Transaction Tax (STT) both at the time of purchase and sale.
This type of gain is common among stock market investors, traders, and businesses that engage in equity investments for short-term objectives. Understanding STCG is crucial for ensuring proper tax compliance during income tax return (ITR) filing. Any short-term capital gains must be reported under the “Capital Gains” section of the ITR, and failure to declare them can lead to notices or penalties from the Income Tax Department.
For small business owners and first-time investors, accurately computing and reporting STCG helps maintain clean tax records and supports smooth financial audits or loan applications. Moreover, maintaining investment documentation—such as contract notes and demat account statements—is essential for accurate gain calculation.
To learn more about how STCG fits into overall tax planning and to explore comprehensive tax filing assistance, visit FinTax24’s Income Tax Solutions.
In summary, STCG on listed equity shares is a key concept in personal and business taxation, especially for those active in stock market investments. Understanding it helps ensure timely and accurate tax compliance.