Equity STCG tax under Section 111A.
STCG tax payable
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Short-term gain
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What Section 111A actually covers
When you sell listed shares or equity mutual fund units within twelve months of buying them, the profit is a short-term capital gain, and Section 111A of the Income Tax Act sets the tax. The defining feature is that this gain is taxed at a flat special rate rather than being thrown in with your salary and taxed at your slab. The trade must be one on which Securities Transaction Tax was paid, which is true for any normal sale through a recognised stock exchange. So 111A applies to your equity delivery trades and your equity-oriented fund redemptions, but not to unlisted shares, debt funds, or gold, which follow their own rules. This calculator applies the current 111A rate to the gain you enter.
The Budget 2024 jump from 15% to 20%
For years the 111A rate sat at a comfortable 15%. The July 2024 Budget raised it to 20% for any transfer made on or after 23 July 2024, a meaningful one-third increase that caught a lot of active traders off guard. If you sold equity before that date the old 15% applies; sell after it and you are on 20%. On top of the 20% you also owe a 4% health and education cess, and a surcharge if your total income is high enough, so the genuine effective rate is a touch above 20% for most and higher for large incomes. This tool shows the base 111A tax; remember to layer the cess on top when you plan your advance tax.
Worked example: an ₹80,000 short-term gain
Say you bought shares for ₹3,00,000 and sold them eight months later for ₹3,80,000. The gain is short-term because the holding was under a year, so 111A applies at 20%.
| Step | Amount |
|---|---|
| Sale value | ₹3,80,000 |
| Less purchase value | ₹3,00,000 |
| Short-term capital gain | ₹80,000 |
| STCG tax at 20% | ₹16,000 |
| Add 4% cess | ₹640, so ₹16,640 all-in |
The chart shows how little of the ₹80,000 gain the tax actually claims at the flat rate, with the cess as the thin sliver on top.
Set-offs, the basic exemption quirk, and ITR forms
A few rules can shrink the bill. Short-term capital losses can be set off against both short-term and long-term capital gains in the same year, and any unabsorbed loss carries forward for eight assessment years, provided you file your return by the due date. There is also a useful provision for low earners: if you are a resident and your other income falls below the basic exemption limit, you can use the unutilised part of that limit against this STCG before the 20% bites, which can wipe out the tax entirely for someone with little other income. Reporting requires the right form. Anyone with capital gains must file ITR-2, or ITR-3 if they also have business income; the simple ITR-1 does not allow capital gains at all. A common error I see is people reporting equity gains under business income or skipping them because no tax was deducted at source, both of which invite a notice.
Is there any exemption limit on STCG like the ₹1.25 lakh on LTCG?
No. The ₹1.25 lakh annual exemption applies only to long-term equity gains under Section 112A. Short-term gains under 111A have no such exemption; the 20% applies from the first rupee of gain, subject only to the basic-exemption adjustment mentioned above for those with low total income.
What if I held the shares for just over a year?
Then it is no longer short-term. Listed equity held for more than twelve months becomes long-term and is taxed under Section 112A at 12.5% beyond the ₹1.25 lakh exemption, a materially lower rate. That one-day difference between 365 and 366 days can change your tax substantially, which is why holding-period planning around the anniversary is worth the attention.