Tax on Short-Term Capital Gain from Sale of Securities Chargeable to STT
Introduction
Short-term capital gains (STCG) from the sale of specified securities are taxable at a concessional rate of 20% or 15%, provided the Securities Transaction Tax (STT) is paid at the time of sale. Deductions under Chapter VI-A are not permitted against such gains.
Key Provisions
- Eligibility for Concessional Tax Rate
- Available to all assessees on STCG arising from specified securities.
- Specified Securities
- Equity shares.
- Units of equity-oriented mutual funds.
- Units of business trusts.
- Conditions for Concessional Rate
- STT must be paid at the time of transfer.
- Exception: Transactions on recognised stock exchanges in International Financial Services Centres (IFSCs) do not require STT if consideration is in foreign currency.
- Tax Rate
- 20% (15% if security is transferred before July 23, 2024), plus surcharge and health & education cess.
Restrictions and Exceptions
- No Adjustment Against Basic Exemption Limit
- Entire STCG is taxable at 20% or 15%, without adjustment for the basic exemption limit.
- Exception: Resident individuals and HUFs may adjust the basic exemption limit against such STCG. If total income (excluding STCG) is below the exemption limit, STCG can be reduced by the shortfall.
- No Deductions Under Sections 80C to 80U
- Deductions under Chapter VI-A are not allowed from such STCG.