STCG

Full form: Short-Term Capital Gains

Tax & Deductions

STCG is the profit from selling a capital asset held for less than the minimum holding period for long-term treatment. For equity and equity mutual funds: 20% tax on gains from assets held under 12 months. For other assets (property, gold): slab rate on gains from assets held under 24 months.

In detail

STCG rates post Budget 2024:
Equity shares and equity mutual funds: 20% for assets held under 12 months.
Debt mutual funds: slab rate regardless of holding period.
Real estate: slab rate for assets held under 24 months.
Gold (physical/ETF): slab rate for assets held under 24 months.

STCG on equity has no exemption threshold (unlike LTCG which has Rs 1.25L annual exemption). Avoid equity redemptions under 12 months wherever possible -- the tax differential (20% STCG vs 12.5% LTCG) significantly impacts net returns.

Formula

STCG tax (equity) = Gain x 20% No exemption limit applies Effective: if you bought equity at Rs 1L and sold at Rs 1.5L within 6 months: Gain = Rs 50,000 STCG tax = Rs 10,000 Net proceeds = Rs 1,40,000

Real-life example

🇮🇳 India example

Vijay bought Nifty 50 ETF units in January at Rs 2L. Markets rallied 25% and he sold in August (7 months) at Rs 2.5L. Gain = Rs 50,000. STCG tax at 20% = Rs 10,000. If he had waited until February (13 months), the same gain would attract LTCG at 12.5% = Rs 6,250. Waiting 6 more months saved Rs 3,750 in tax.

Frequently asked questions

Is STCG applicable on SIP redemption? ▼

Yes, if you redeem SIP units purchased within the last 12 months. Each SIP instalment has its own 12-month holding period from its specific purchase date. Most SIP investors hold long-term -- but if you do a partial redemption, the oldest units are treated as redeemed first (FIFO method), minimising STCG.