TaxFinancial Glossary
STCG (Short Term Capital Gains)
Definition
Tax on profits from selling capital assets held below the long-term threshold. For listed equity and equity mutual funds, STCG applies to holdings sold within 12 months and is taxed at a flat 20%. For other assets, STCG is added to your income and taxed at the applicable slab rate.
Why It Matters
The difference between STCG (20%) and LTCG (12.5% above Rs 1.25 lakh) on equity is significant. Selling equity investments a few weeks before the 12-month mark costs you an extra 7.5% in tax. For debt funds (post April 2023), there is no distinction — gains are always taxed at your slab rate.