Short-Term Capital Gains (STCG) Tax Guide 2026: Rates, Calculation & Exemptions

What makes a gain "short-term"

The holding period that separates short-term from long-term depends on the asset: listed equity shares and equity mutual funds are short-term if sold within 12 months, while immovable property, unlisted shares and debt-oriented assets generally need to be held under 24 or 36 months (depending on the asset class) to count as short-term.

STCG rate on listed equity and equity mutual funds

Gains on listed equity shares and equity-oriented mutual funds sold within 12 months, where Securities Transaction Tax (STT) has been paid, are taxed at a flat 20% under Section 111A.

STCG on everything else

Short-term gains on property, unlisted shares, gold, and debt mutual funds don't get a special flat rate — they're added to your total income and taxed at your applicable slab rate, which can be significantly higher than 20% at higher income levels.

Reporting STCG correctly in your ITR

Capital gains need Schedule CG in your return, broken down by asset type and quarter of sale (for advance tax purposes) — a step people commonly get wrong when filing without CA review, which then triggers a mismatch notice against their broker/AIS data.

If you've already received a notice

A capital-gains mismatch is one of the most common reasons for an income tax notice — if you've received one, respond within the given window with full transaction-level reconciliation.

FAQs

Can I set off STCG against a capital loss? Yes — short-term capital loss can be set off against both short-term and long-term capital gains in the same year, and carried forward for 8 years if unused.

Is there a basic exemption for STCG like for salary income? Only residents can adjust unused basic exemption limit against STCG under Section 111A; non-residents cannot.