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Published on:

April 4, 2025

Alankar Mishra

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Basics of GST

What are Short-Term Capital Gains? Check STCG Tax Rate 2025

Putting money into stocks, real estate or mutual funds is done with the expectation of making a profit. Thus, any profits earned from selling these assets within a short time frame are classified as short-term capital gains (STCG). STCG have different tax ramifications than long-term capital gains, which is why it’s mandatory to comprehend how they apply to your assets. In this article, we aim to explain what short-term capital gains are and their taxation rules for 2025, as well as how to optimize tax liabilities.

What are Short-Term Capital Gains?

Short-term capital gains (STCG) come into the picture when a capital asset is sold by the investor within a defined short term. The period which decides whether a gain would be considered long term or short term depends on the type of asset:

‍Equity Shares & Equity-Oriented Mutual Funds: Gains are categorized as short-term when the holding period is less than 12 months.

‍Debt Mutual Funds, Bonds, Gold & Real Estate: Gains are considered short-term when the asset is sold within 36 months.

‍Cryptocurrency and other Digital Assets: In many jurisdictions, cryptocurrencies are regarded as assets and their STCG would apply should they be held for less than 12 months.

Short-term capital gains are included with the income of a person and are taxed at the declared rates and for some assets, a different tax rate is used.

Short-Term Capital Gains Tax Rate 2025

Short-term capital gains tax (STCG) is dependent on the nature of the asset and the individual’s income tax slab. However, here are the associated rates for 2025:

‍1. STCG on Equity Shares and Equity-Oriented Mutual Funds: Listed equity shares and equity-oriented mutual funds have their STCG taxed at a flat rate of 15% under Section 111A of the Income Tax Act.

‍2. STCG on Debt Mutual Funds: Debt funds, real estate, gold, and other capital assets have their short-term capital gains added as income and taxed based on the income slab, which may be:

5% for income up to ₹2.50 lakh in India

10% for income from ₹2.5 lakh - ₹5 lakh

20% for income from ₹5 lakh - ₹10 lakh

30% for income above ₹10 lakh

‍3. STCG on Cryptocurrency: The government applies a flat 30% tax on cryptocurrency and other digital assets the same way as tax on lottery winnings which does not allow deductions or set off for losses.

Calculation of Short-Term Capital Gains Tax

STCG is calculated as follows:

STCG = Sale Price - (Cost of Acquisition + Transfer Expenses + Improvement Costs, if any)

Let’s say you purchase shares for ₹1,00,000 and sell them after six months for ₹1,50,000. STCG would be ₹50,000. If it qualifies for Section 111A, then the tax is charged at 15%, giving a tax due of ₹7,500.

How to Save Tax on Short-Term Capital Gains?

Tips To Lower Your Short Term Capital Gain Tax Obligations

Although there is no escaping paying the STCG tax, here are some suggestions to reduce your tax obligations:

Making Use of Tax Allowances: If your total taxable income, even with STCG, is less than the tax exemption limit, you may not have to pay STCG tax.

Tax Loss Write-off: Offsetting short-term capital gains by selling investments that have incurred losses can help in reducing the overall gains that are taxable.

Invested In Tax Exempt Securities: The same is true with tax-exempt bonds and some government bonds; the proceeds will be untaxed.

Long-Term Hold: Putting your short-term gain assets in your long-term-held assets lowers your tax payment. You're not going to pay as much when you finally decide to sell because long-term gains usually come with a lower tax rate than short-term gains.

Recent Changes & Updates in 2025

Tax policies undergo frequent adjustment, and here's what may affect STCG taxation in 2025:

‍Potential Changes in Slabs: Governments have made alterations to income tax slabs over the years, which might change the taxation of STCG on non-equity assets.

‍Regulations Around Cryptocurrency: There is a new wave of regulation surrounding crypto, and some countries are thinking about placing lower tax bands on controlled exchanges.

‍Indexation Benefits for Debt Funds: There used to be a discussion of indexation benefits for long-term gains on debt funds, and there are talks about applying it to short-term debt fund investment,s too.

Conclusion

In 2025, tax implications for short-term capital gains is an important matter to keep in mind for traders. Knowing how the applicable rates work and which methods of tax saving exist enables one to maximize their returns. Thoughtful approaches to stock market, mutual fund, real estate, or cryptocurrency investing help limit tax exposure while improving the bottom line. Always pay attention to tax policies and seek the advice of a professional for specific tax planning strategies.

FAQs

1. Do I have to pay tax on STCG even if my total income is below the taxable limit?

If your total earnings, including STCG, do not exceed the basic exemption limit, you probably do not have to pay STCG tax (unless in certain scenarios like crypto assets where a fixed rate is charged).

2. Can STCG losses be carried forward?

That is correct. STCG losses may be carried forward for a maximum of eight years to offset future capital gains.

3. Are there exemptions for senior citizens?

Elders get more benefit because of higher exemption limits, however, STCG on listed shares is taxable at 15% as per Section 111A.

4. Is there any way to reduce the STCG tax on cryptocurrency?

At this moment, the taxation on STCG of crypto is a flat 30% with no exemptions. Any effective tax planning like offsets with allowable expenses, may offer some relief.

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