Is Short Term Capital Gain Taxable?

While filing my ITR, I enquired my tax consultant whether, “ Is short term capital gain taxable?” He informed me that the earnings made from selling capital assets held for less than 36 months are referred to as short-term capital gains. The money received from the selling of shares is classified as income under the category of capital gains and is subject to taxation.

How to know whether short term capital gain is taxable or not?

Short-term capital gains are taxable at 15%. 

Calculation of short-term capital gain = Sale price minus Expenses on Sale minus the Purchase price.

The profits earned are split into two categories in order to easily compute the STCG tax rate on shares;

• STCG that fall under section 111 A

• STCG  that fall do not fall under section 111 A

According to section 111 A of the Income Tax Act of 1961, short-term equity gains on shares are taxable. The tax liability for profits from equity shares, equity-oriented mutual funds, business trust units, etc. traded through a reputable stock exchange on or before October 1, 2004, is provided in this section.

However, under section 111 A of the ITA, gains from shares that are not listed on any recognised stock exchange are not subject to taxation. These shares are charged according to the appropriate income tax slabs and are included in the investor's income for income tax purposes. This taxation category also includes shares that do not qualify as equity shares.

Unfortunately, STCG on shares is not tax-exempt. People are, however, excluded from paying income tax on STCG on shares if their income falls below a certain threshold. 

A handful of these situations that are ruled exempt are listed below:

• Residents who are 80 years or above of age with an annual income of upto Rs. 5 lakh.

• Residents who are 60 years or above of age but below 80 years with an annual income of upto Rs. 3 lakh.

• Residents who are 60 years of age with an annual income of upto Rs. 2.5 lakh.

• Hindu Undivided Families with an annual income of Rs. 2.5 lakh.

I’d like to conclude my answer here about the query, “ Is short term capital gain taxable?” I hope this helps:)

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