Stock Market · Markets & Taxation

STCG vs LTCG for stocks

When you sell a listed equity share or equity mutual fund, you pay capital gains tax. The rate depends on how long you held it.

Short-Term Capital Gain (STCG)

Holding period: up to 12 months.

Tax rate: 20% flat (from Budget 2024, was 15% earlier).

No indexation benefit. No deduction for expenses except brokerage.

Long-Term Capital Gain (LTCG)

Holding period: more than 12 months.

Tax rate: 12.5% on gains ABOVE ₹1.25 lakh per financial year (from Budget 2024. Exemption was ₹1 lakh before).

Example: You held a stock for 18 months and made ₹3 lakh profit.

LTCG = ₹3 lakh − ₹1.25 lakh exemption = ₹1.75 lakh taxable × 12.5% = ₹21,875 tax.

> The ₹1.25 lakh LTCG exemption resets every financial year. Plan your exits around the April-March year to maximise tax-free gains.

Key rules

• No LTCG grandfathering after January 2018 cost base, current rules apply
• Securities Transaction Tax (STT) of 0.1% is paid at the time of sale
• If your income is in the 0% or 5% tax slab, LTCG still gets taxed at 12.5%, no concessional treatment

STCG20%, hold < 12 months

LTCG12.5% above ₹1.25L exemption, hold > 12 months

[compare:STCG (< 12 mo)=20% flat|LTCG (> 12 mo)=12.5% above ₹1.25L]

Takeaway. Listed equity STCG (under 12 months) taxed at 20%. LTCG (over 12 months) taxed at 12.5% with ₹1.25 lakh annual exemption. Budget 2024 raised both rates. Know the current numbers before you sell.