STCG vs LTCG: Which Rate Hits Your Profits?

When you sell stocks, mutual funds, or property for a profit, the tax you pay depends on how long you held the asset. Short-term gains are taxed higher. Knowing the difference can legally save you thousands of rupees.

Here's what happened: Budget 2024 revised capital gains tax: STCG on listed equity rose to 20%, LTCG stays at 12.5% above ₹1.25 lakh exemption.. The holding period that separates 'short-term' from 'long-term' differs by asset — 1 year for stocks, 2 years for property, 3 years for debt mutual funds.. Capital gains must be reported in your ITR using the correct form — ITR-2 or ITR-3 — even if your employer doesn't show it in Form 16..

What you should do: Check your holding period before selling any stock or mutual fund unit — even one extra day can shift you from STCG to LTCG and cut your tax rate.. Use your ₹1.25 lakh LTCG exemption every financial year by booking long-term equity profits strategically — a move called tax harvesting.. File ITR-2 (salaried with capital gains) or ITR-3 (business income) this July — do NOT file ITR-1 if you have any stock or fund sale profits..

You can legally reset your LTCG cost basis each year by selling and rebuying units — booking gains under ₹1.25 lakh annually means zero equity tax, permanently.