Trusted by 1L+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 1L+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Short Term Capital Gain on Shares: Calculation & Examples
Short Term Capital Gain on Shares: Calculation & Examples
May 10, 2023
5 Minutes
Unlocking Short-Term Capital Gain on Shares: A Comprehensive Guide
Understanding short-term capital gains on shares is pivotal for investors navigating the dynamic stock market. Whether it's a quick turnover or a strategic move, comprehending the taxation aspects is essential. Here's an SEO-friendly breakdown:
Defining Short-Term Capital Gain on Shares:
A short-term capital gain on shares arises when an investor sells shares held for up to 12 months at a price higher than the purchase cost.
Taxation Dynamics:
Short-term capital gains on shares attract higher tax rates compared to long-term gains. The tax rate for gains under Section 111A is 15%, with additional charges if applicable.
Distinguishing Categories:
STCG Under Section 111A:
Taxed at a fixed rate of 15%.
Examples include gains from the sale of listed equity shares or equity-oriented mutual funds.
STCG Not Under Section 111A:
Taxed as per the individual's income tax slab.
Encompasses gains from unlisted equity shares, debt-oriented mutual funds, and more.
Illustrative Scenarios:
Example under Section 111A:
Ms. Smriti sells equity-oriented funds after eight months.
Tax at 15%, plus surcharge and cess, is applicable.
Example not under Section 111A:
Mr. Singh sells debt funds held for eight months.
Standard tax rate applies based on his income tax slab.
Calculation Simplified:
The short-term capital gain on shares is computed by deducting the purchase cost from the selling price.
Example:
Selling Price: Rs. 12,000
Purchase Price: Rs. 10,000
Short-Term Capital Gain: Rs. 2,000
Formula for STCG on Shares:=(Sale Value)−((Cost of Acquisition)+(Expenses))
STCG=(Sale Value)−((Cost of Acquisition)+(Expenses))
Components of the Formula:
Sale Value:
Gross selling price, considering brokerage charges and Securities Transaction Tax for equity shares.
Cost of Acquisition:
For equity shares bought before Feb 1, 2018, computed based on fair market value.
For equity shares purchased after, the actual purchase cost.
Cost of Asset Improvement:
Not applicable for equity shares.
Expenses Incurred:
Includes registration, brokerage, and other charges (excluding Securities Transaction Tax for equity shares).
Holding Period and Indexation:
Holding Period:
Calculated from the asset's acquisition date to the day before its sale.
Indexation:
Not applicable for short-term capital gains on shares.
Empowering Investors:
For those venturing into short-term capital gains on shares, a grasp of computation intricacies, tax liabilities, and profit potential is indispensable. Ensure clarity on the cost components for precise calculations.
Disclaimer: This content provides informational insights; for tailored financial advice, consult with a professional advisor.
Unlocking Short-Term Capital Gain on Shares: A Comprehensive Guide
Understanding short-term capital gains on shares is pivotal for investors navigating the dynamic stock market. Whether it's a quick turnover or a strategic move, comprehending the taxation aspects is essential. Here's an SEO-friendly breakdown:
Defining Short-Term Capital Gain on Shares:
A short-term capital gain on shares arises when an investor sells shares held for up to 12 months at a price higher than the purchase cost.
Taxation Dynamics:
Short-term capital gains on shares attract higher tax rates compared to long-term gains. The tax rate for gains under Section 111A is 15%, with additional charges if applicable.
Distinguishing Categories:
STCG Under Section 111A:
Taxed at a fixed rate of 15%.
Examples include gains from the sale of listed equity shares or equity-oriented mutual funds.
STCG Not Under Section 111A:
Taxed as per the individual's income tax slab.
Encompasses gains from unlisted equity shares, debt-oriented mutual funds, and more.
Illustrative Scenarios:
Example under Section 111A:
Ms. Smriti sells equity-oriented funds after eight months.
Tax at 15%, plus surcharge and cess, is applicable.
Example not under Section 111A:
Mr. Singh sells debt funds held for eight months.
Standard tax rate applies based on his income tax slab.
Calculation Simplified:
The short-term capital gain on shares is computed by deducting the purchase cost from the selling price.
Example:
Selling Price: Rs. 12,000
Purchase Price: Rs. 10,000
Short-Term Capital Gain: Rs. 2,000
Formula for STCG on Shares:=(Sale Value)−((Cost of Acquisition)+(Expenses))
STCG=(Sale Value)−((Cost of Acquisition)+(Expenses))
Components of the Formula:
Sale Value:
Gross selling price, considering brokerage charges and Securities Transaction Tax for equity shares.
Cost of Acquisition:
For equity shares bought before Feb 1, 2018, computed based on fair market value.
For equity shares purchased after, the actual purchase cost.
Cost of Asset Improvement:
Not applicable for equity shares.
Expenses Incurred:
Includes registration, brokerage, and other charges (excluding Securities Transaction Tax for equity shares).
Holding Period and Indexation:
Holding Period:
Calculated from the asset's acquisition date to the day before its sale.
Indexation:
Not applicable for short-term capital gains on shares.
Empowering Investors:
For those venturing into short-term capital gains on shares, a grasp of computation intricacies, tax liabilities, and profit potential is indispensable. Ensure clarity on the cost components for precise calculations.
Disclaimer: This content provides informational insights; for tailored financial advice, consult with a professional advisor.
Author
Pluto Team
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