When you buy shares and sell them within 1 year (12 months) at a profit, the money you earn is called a Short Term Capital Gain (STCG).
Let’s break it down in easy words.
What is Short Term Capital Gain (STCG)?
If you buy shares and sell them within 12 months for a higher price, the profit is taxed as short term capital gain.
This applies only to shares listed on stock exchanges like NSE or BSE.
STCG Tax Rate on Shares
The government charges 15% tax on your short term capital gain from shares.
✅ This is flat 15%, no matter how much profit you earn.
❌ No extra tax slabs like in salary income.
How to Calculate STCG on Shares
Formula:
STCG = Selling Price – Purchase Price – Brokerage or Charges
Then apply 15% tax on the gain.
Simple Example 1:
- You bought 100 shares of a company at ₹100 = ₹10,000
- Sold them in 6 months at ₹120 = ₹12,000
- Profit = ₹2,000
- STCG Tax = 15% of ₹2,000 = ₹300
So you pay ₹300 as tax.
Simple Example 2 (With Charges):
- Buy 50 shares at ₹200 = ₹10,000
- Sell at ₹220 = ₹11,000
- Brokerage and other charges = ₹100
- Net profit = ₹900
- STCG Tax = 15% of ₹900 = ₹135
When STCG Tax is Not Applicable
You don’t need to pay tax if:
- Your total taxable income (including STCG) is less than ₹2.5 lakh (basic exemption limit for individuals under 60).
- If your total income is within the tax-free limit, even short term gains can be tax-free.
STCG vs Long Term Capital Gain (LTCG)
| Type | Holding Period | Tax Rate |
|---|---|---|
| STCG | Less than 12 months | 15% |
| LTCG | More than 12 months | 10% (above ₹1 lakh gain) |
Why STCG Matters
- Useful for traders and investors who buy/sell shares frequently.
- Helps plan your tax on profits smartly.
