Short Term Capital Gains Tax – STCG Rates and Rules for FY 2025-26

STCG rules changed meaningfully after Budget 2024, and understanding exactly which holding period and tax rate applies to your specific asset — equity, property, gold, or crypto — genuinely affects how much you keep from a sale. This is particularly relevant if you're planning to use investment proceeds toward a home purchase, since timing a sale correctly can shift your gain from short-term to long-term treatment.

This page covers:

• What qualifies as short-term based on asset type and holding period
• Current STCG tax rates for FY 2025-26 by asset class
• Budget 2026 updates — STT changes and share buyback taxation
• How to calculate STCG with a worked property example
• STCG on shares, mutual funds, debentures, ULIPs, and crypto
• Rules for non-residents and inherited/gifted assets
• Strategies to minimise your STCG tax liability

Short-term capital gains tax (STCG) applies to profits earned from selling capital assets within a short duration. The holding period criteria vary by asset type:

• Listed equity shares and equity-oriented mutual funds: less than 12 months
• Unlisted shares and real estate: less than 24 months
• Other capital assets: holding period defined per category

STCG is calculated as the difference between selling price and purchase price, excluding brokerage or transaction costs, and is taxed per applicable income tax slabs except for specific asset classes with a fixed rate.

The flat 20% rate for listed equity applies to transactions from 23 July 2024 onward, irrespective of the taxpayer's income slab.

• Status quo on rates: The Finance Minister did not alter existing STCG rates in Budget 2026, prioritising stability and predictability for investors.
• Share buyback taxation: Buyback proceeds may now be taxed as capital gains rather than dividends — potentially more beneficial for individual shareholders depending on their overall tax position.
• Securities Transaction Tax (STT): From 1 April 2026, STT on Futures rose from 0.02% to 0.05%, and on Options from 0.10% to 0.15% — affecting frequent traders more than long-term investors.
• Exemption limits: No separate STCG exemption limit exists, but resident individuals can use their basic exemption threshold (Rs. 3,00,000 new regime/ Rs. 2,50,000 old regime) if other income is below that level.

Example: Gold bought in July 2023 and sold in August 2025 is now a long-term capital gain under the revised rules — previously, holding until July 2026 would have been required for the same treatment.

Anita purchased a residential property in 2024 for Rs. 35 lakh and sold it in 2025 for Rs. 80 lakh. Since the property was sold within 24 months, it is classified as a short-term capital asset.

This Rs. 45 lakh gain gets added to Anita's total income and taxed at her applicable slab rate — with no indexation benefit available since the gain is short-term.

• Shares: Listed equity sold within 12 months is taxed at 20% (plus surcharge/cess) under Section 111A if STT is paid; unlisted shares within 24 months are taxed at slab rates.
• Mutual funds: Specified mutual funds investing 65%+ in debt/money market instruments (acquired on/after 1 April 2023) are always treated as STCG, taxed at slab rates, regardless of actual holding period.
• Debentures/ bonds: From 23 July 2024, gains from market-linked debentures and unlisted debentures/bonds are always short-term, taxed at slab rates with no indexation.
• ULIPs: ULIPs with premiums exceeding 10% of sum assured, or annual premiums above Rs. 2.5 lakh, are treated as capital assets — redemption income is taxed as capital gains.
• Crypto assets: Taxed at a flat 30% regardless of holding period, with no basic exemption limit, slab benefit, or deductions allowed except cost of acquisition.

• Non-residents: Cannot use the basic exemption limit against STCG under Section 111A; TDS is mandatory on their short-term gains; DTAA relief may apply to avoid double taxation.
• Inherited assets: The previous owner's holding period is included, so inherited assets usually qualify as long-term rather than short-term.
• Gifted assets: The previous owner's holding period is also counted, but short-term gains can still arise depending on the combined holding duration. Tax liability arises only at the time of eventual sale, not at receipt.
• Depreciable assets: Gains on depreciable assets are always treated as short-term, regardless of actual holding duration, with previously claimed depreciation adjusted into the final calculation.

1. Hold investments longer — crossing into LTCG treatment (12.5% after Rs. 1.25 lakh for equity) is often cheaper than the 20% STCG rate
2. Offset gains with losses — use tax-loss harvesting to reduce taxable STCG
3. Time your sales strategically — delaying a sale near the LTCG threshold can meaningfully change your tax outcome
4. Use the one-time LTCL set-off provision — long-term capital losses incurred up to 31 March 2026 can be set off against STCG from AY 2026-27 onward, a new one-time relief under the Income Tax Bill 2025
5. Consider joint ownership for property — splitting gains among co-owners lets each utilise their individual exemption threshold

If you're planning to sell investments to fund a home purchase, timing your sale wisely — potentially crossing into long-term treatment — could reduce your tax burden meaningfully. Bajaj Finance offers competitive rates starting at 7.25% p.a.* and loan amounts up to Rs. 15 Crore* to help you invest in your dream home. Check your eligibility today.

Understanding STCG's holding-period rules and current tax rates helps you plan asset sales — whether shares, property, or gold — with genuine tax efficiency, particularly when the proceeds are earmarked for a major purchase like a home.