Demystifying Short-Term Capital Gains Tax in India

Section 111A Overview: Understand short-term capital gains taxation under Section 111A of the Income Tax Act, which applies to listed equity shares, equity mutual funds, and units of business trusts. Taxation Conditions: Transactions must occur on recognized stock exchanges, and Securities Transaction Tax must be paid during both purchase and sale.

Special Tax Rate: Short-term gains from qualifying transactions are taxed at a special rate of 15%, ensuring clarity and consistency for investors. Tax Calculation Example: Mr. Akash's case demonstrates how to calculate tax on short-term capital gains from selling listed equity shares.

Adjustment Against Basic Exemption Limit: Resident taxpayers like Mr. Akash can offset short-term capital gains against the basic exemption limit to minimize taxes. Reporting in ITR: Taxpayers must report short-term capital gains in Schedule CG of the Income Tax Return, providing details of sales value, acquisition cost, and deductions.

Managing Losses: Short-term capital losses can be set off against both short-term and long-term capital gains, with any remaining loss carried forward for up to 8 years.