Short Term Capital Gain Tax Calculator

Short-Term Capital Gains are profits earned from sale of an asset held for a short duration. For certain assets like listed securities, units of equity-oriented mutual funds, and zero-coupon bonds, the holding period is less than 12 months. Short-Term Capital Gains tax rate varies: for listed equity shares & equity-oriented mutual funds, rate is 20% effective from July 23rd, 2024. For other assets, such as property & unlisted shares, gains are taxed at applicable income tax slab rate. Mutual fund investors should note that short-term capital gain tax on mutual fund investments applies if units are sold within 12 months. Short-Term Capital Gains tax calculator can help investors determine their tax liability.

Profits, investor makes from the sale of a capital asset is known as capital gain. It is a general phrase that covers a wide range of assets that produce income, such as land, real estate, buildings, patents, gold, equity investments, & many more.

Proceeds from sale of these capital assets are considered individual's "income" & are therefore subject to taxation under Income Tax Act of 1961. As a result, in years of asset transfer, any individual who includes profits from sale of these assets in their income corpus is subject to taxation on the same amount.

Depending on how long assets are held, profits on capital assets are split into two categories:
1: LTCG
2: STCG

An explanation of tax implications of Short-Term Capital Gains for individuals who invest in short-term capital assets is provided in this article.

To calculate Short-Term Capital Gain (STCG) under Indian taxation policy, follow these steps:

1-Determine Sale Price: Identify full value of consideration received or accruing from transfer of capital asset.

2-Deduct Cost of Acquisition: Subtract purchase price of asset from sale price. If any expenditure was incurred directly in connection with transfer, it should also be subtracted.

3-Deduct Improvement Costs: Subtract any expenses incurred for improvements made to assets, if applicable.

4-Compute Gain: The resulting figure after these deductions is your short-term capital gain.
The formula is:

STCG = Sale Price − (Cost of Acquisition + Cost of Improvement + Expenditure on Transfer)

Short-Term Capital Gains are taxed at the applicable income tax rate for your income slab, except in case of equity shares or equity-oriented mutual funds, which attract a flat tax rate of 20% as of Budget 2024-2025.

For transfers taking place on or after July 23rd, 2024, taxation of short-term capital gain for listed equity shares, unit of equity-oriented fund, & unit of business trust has been increased to 20% from 15%.

Type of asset being sold determines short-term capital gain tax rate. Following are tax rates that apply to various asset types:

1. Listed Equity shares & Equity-oriented mutual funds: 20% concessional rate applies to Short-Term Capital Gains (STCG) on listed shares & equity-oriented mutual funds.

2. Other assets (Property, Real estate, Unlisted shares, etc.):  STCG is subject to tax at taxpayer's regular slab rates.

When shares or other assets are held for a shorter period of time than predetermined period, typically less than a year, short-term capital gains arise. If held for less than a year, listed equity shares are classified as short-term capital assets. Conversely, gains from equity shares that are not listed are only considered short-term if holding duration is under 24 months.

Selling property that has been owned for less than 24 months results in short-term capital gain, or STCG. Like regular income tax rates, STCG is taxed at the taxpayer's applicable slab rates. For STCG, there are no indexation benefits on property.

Income Tax Act's Sections 54B & 54D offer STCG exemptions, which help taxpayers lower their tax obligations on Short-Term Capital Gains. Gains from sale of agricultural land utilized for farming are covered under Section 54B as long as money received is reinvested in more agricultural land. In a similar vein, profits from sale of buildings or industrial land can be reinvested in other industrial properties to qualify for tax deductions under Section 54D. Purpose of these regulations is to minimize tax impact on capital gains by promoting reinvestment in particular asset classes.