Short-Term Capital Gains Tax: What Changes Under the 2025 Income Tax Bill?
The short-term capital gains tax has long impacted equity investors. Let’s break it down for investors and consultants.
- STCG on listed equity shares, equity-oriented mutual funds, and units of business trusts remains taxable at 15% (plus surcharge and cess).
- Condition: Transaction must be through a recognised stock exchange and subject to STT (Securities Transaction Tax).
🔁 Clause 196 vs Section 111A – Key Differences
| Feature | Section 111A (1961 Act) | Clause 196 (2025 Bill) |
|---|---|---|
| Applicable Assets | Listed shares, equity MFs, business trust units | Same |
| Tax Rate | 15% (plus surcharge + cess) | Same |
| Condition | STT must be paid | Same |
| Structural Format | Scattered and lengthy | Concise, clause-based |
| Section Reference for Deduction | No specific clause for STCG deduction | Clear cross-reference under Chapter 5 |
🧾 Government Notification & Legal Reference
- Clause 196, Income-tax Bill, 2025 (Draft tabled in Lok Sabha)
- Section 111A, Income-tax Act, 1961
- Read Clause 196 here: taxmanagementindia.com STCG Clause 196
👨⚖️ Expert View: Why Structure Matters
This aligns with India’s push for simplified direct tax code.
✅ Compliance Tip for FY 2024-25
Make sure your capital gains from listed shares are routed through recognised stock exchanges and STT is paid, or the 15% rate won’t apply. Misreporting can attract higher slab rate taxation under general provisions.
📌 Practical Scenarios
Example 1:
- Sold listed shares after 6 months → STCG
- STT paid on buy/sell
- Tax @ 15% under Clause 196
Example 2:
- Sold unlisted shares → Not eligible for 15% rate
- Taxed under regular slab or business income
❓ FAQ
Q1. Will STCG rate increase under the new bill?
No. The 15% rate continues under Clause 196 for eligible transactions.
Q2. Is LTCG affected by Clause 196?
No. Clause 196 only covers short-term capital gains.
Need help filing capital gains tax correctly?
📩 Get expert assistance at Efiletax.in – Your compliance partner for capital markets and beyond.
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