📱Test our Android app — free beta!Join Beta GroupYou'll receive the install link by email after joining.

Differences

This shows you the differences between two versions of the page.


—stcg-section-111a-equity-shares-tax-india [2026/07/22 17:44] (current) – created - external edit 127.0.0.1
Line 1: Line 1:
 +{{htmlmetatags>metatag-title=(STCG Tax on Equity Shares Under Section 111A)&metatag-description=(STCG on listed equity shares and equity mutual funds under Section 111A is taxed at 20 percent from 23 July 2024, up from 15 percent. Full 2026 guide.)&metatag-keywords=(STCG section 111A, equity tax rate, short term capital gains shares, 111A 20 percent)&metatag-robots=(index,follow)&metatag-og:title=(STCG Tax on Equity Shares Under Section 111A: Guide 2026)&metatag-og:description=(STCG on listed equity shares and equity mutual funds under Section 111A is taxed at 20 percent from 23 July 2024, up from 15 percent. Full 2026 guide.)&metatag-og:type=(article)}}
  
 +====== STCG Tax on Equity Shares Under Section 111A: Guide 2026 ======
 +
 +
 +
 +{{ :social:auto:stcg-section-111a-equity-shares-tax-india.png?direct&1200 |STCG Tax on Equity Shares Under Section 111A: Guide 2026 — RTI Wiki}}
 +
 +<WRAP center round info 95%>
 +**Quick Reply:** STCG on listed equity shares and equity mutual funds under Section 111A is taxed at 20 percent from 23 July 2024, up from 15 percent. Full 2026 guide.
 +</WRAP>
 +
 +If you sold listed equity shares or equity mutual fund units within 12 months and paid Securities Transaction Tax, your short-term capital gain is taxed under Section 111A of the Income Tax Act 1961. This is the single rule that decides how much tax you owe on a quick stock or fund exit.
 +
 +<WRAP center round box 90%>
 +**Direct answer:** STCG under Section 111A is taxed at a flat **20%** for any sale on or after **23 July 2024**. Before that date the rate was **15%**. The 20% rate applies to listed equity shares and equity-oriented mutual fund units held for **12 months or less** where **STT was paid** on sale. Surcharge and 4% cess apply on top.
 +</WRAP>
 +
 +===== Rate change at a glance: before vs after 23 July 2024 =====
 +
 +The Finance (No. 2) Act 2024, announced in Budget 2024, raised the Section 111A rate. The cut-off is the **date of transfer**, not your purchase date.
 +
 +^ Sale date ^ Section 111A STCG rate ^ Applies to ^
 +| Up to 22 July 2024 | **15%** flat | Listed equity shares + equity MF units, STT paid, held ≤ 12 months |
 +| On or after 23 July 2024 | **20%** flat | Same assets, same conditions |
 +
 +So a share you bought in March 2024 and sold in August 2024 is taxed at 20%, because the **sale** fell after 23 July 2024.
 +
 +===== What Section 111A covers =====
 +
 +Section 111A applies a single concessional flat rate to short-term gains on a narrow set of assets. To qualify, **all** of these must be true 📌:
 +
 +  * The asset is a **listed equity share**, a unit of an **equity-oriented mutual fund**, or a unit of a **business trust**.
 +  * It was **held for 12 months or less** before sale (this makes the gain short-term).
 +  * The sale is routed **through a recognised stock exchange** and **Securities Transaction Tax (STT) was paid**.
 +
 +If STT was not paid, or the asset is something else (unlisted shares, debt funds, gold, property), Section 111A does **not** apply. Those gains are taxed at slab rates or under other provisions instead. Gains on these assets often need ITR-3 reporting if you trade actively. See our guide on [[https://righttoinformation.wiki/fno-loss-tax-itr-3-non-speculative-india|F&O and trading losses in ITR-3]].
 +
 +===== Same rate in old and new regime =====
 +
 +The Section 111A rate is **regime-independent**. Whether you opt for the old regime or the default new regime for **AY 2026-27 (FY 2025-26)**, your qualifying STCG is taxed at the same flat 20%. Special-rate capital gains are not part of your slab income, so changing regimes does not change this number. Your regime choice only affects how your **other** income is taxed. If you are unsure which return applies to you, read [[https://righttoinformation.wiki/which-itr-form-to-file-2026-27-india|which ITR form to file for 2026-27]].
 +
 +===== Basic exemption limit can shrink your STCG tax =====
 +
 +A **resident individual or resident HUF** gets one useful relief. If your **other income** (everything except the 111A gain) is **below the basic exemption limit**, you can set the shortfall against the STCG before the 20% rate is applied. 💡
 +
 +  * Suppose a retiree's only other income is ₹2,40,000 and the basic exemption limit is ₹3,00,000 (new regime, AY 2026-27).
 +  * The unused exemption is ₹60,000.
 +  * If the STCG is ₹2,00,000, only ₹1,40,000 is taxed at 20% after using up the ₹60,000 shortfall.
 +
 +This adjustment is available **only to residents**. A **non-resident** individual or HUF cannot set the basic exemption against 111A gains.
 +
 +===== 87A rebate is NOT available on 111A STCG =====
 +
 +This is where many small investors slip. For **AY 2026-27**, the **Section 87A rebate cannot be claimed against tax on special-rate income**, including Section 111A STCG. Finance Act 2025 made this explicit: the rebate does not apply to income chargeable at special rates. So even if your **total income** is within the rebate threshold, the tax on your STCG portion stands and must be paid.
 +
 +(An ITAT order had earlier allowed the rebate in some AY 2024-25 cases, but for the current AY 2026-27 the law now clearly bars it. Treat 111A STCG tax as payable regardless of the rebate.)
 +
 +===== Surcharge and cess on top =====
 +
 +The 20% is the base rate. On top of it:
 +
 +  * **Surcharge** applies if your total income crosses the surcharge thresholds. Importantly, the surcharge on 111A and 112A capital gains is **capped at 15%**, even if higher slabs would otherwise push it to 25% or 37%.
 +  * **Health and Education Cess** of **4%** is charged on the income-tax plus surcharge.
 +
 +So a high-income investor's effective 111A rate is 20% + capped surcharge + 4% cess on the total.
 +
 +===== How STCG differs from LTCG under Section 112A =====
 +
 +If you held the same listed shares or equity fund units for **more than 12 months**, the gain becomes **long-term** and is taxed under **Section 112A**, not 111A. The LTCG rate is **12.5%** on gains above **₹1.25 lakh** a year for sales on or after 23 July 2024. The holding period is the dividing line: 12 months or less means 111A short-term, more than 12 months means 112A long-term. For the full long-term picture, read our companion guide on [[https://righttoinformation.wiki/ltcg-tax-equity-shares-mutual-funds-section-112a-india|LTCG tax on equity shares and mutual funds under Section 112A]].
 +
 +===== Worked example =====
 +
 +<WRAP center round info 90%>
 +**Illustration.** An investor buys 500 shares of a listed company in February 2025 and sells all of them in November 2025 (holding under 12 months, STT paid). The sale gives a short-term capital gain of ₹3,00,000.
 +
 +  - Holding period is under 12 months → **Section 111A** applies.
 +  - Rate for a sale in November 2025 → **20%**.
 +  - Tax = 20% of ₹3,00,000 = **₹60,000**, plus 4% cess = **₹62,400**.
 +  - No 87A rebate is available against this STCG.
 +  - If the investor were a resident with low other income, part of the ₹3,00,000 could be set against the basic exemption shortfall first, reducing the taxable STCG.
 +</WRAP>
 +
 +This is illustrative only. Your actual liability depends on your brokerage statement, total income, residency, and surcharge band.
 +
 +===== Common mistakes to avoid =====
 +
 +  * **Using the old 15% rate** for a post-23 July 2024 sale. The rate is 20% now under Section 111A.
 +  * **Counting the purchase date** for the cut-off. The trigger is the **sale (transfer) date**.
 +  * **Assuming the 87A rebate wipes out STCG tax.** It does not apply to 111A gains for AY 2026-27.
 +  * **Forgetting STT.** If STT was not paid on sale, Section 111A and its concessional rate do not apply.
 +  * **Mixing up debt and equity funds.** Only **equity-oriented** funds qualify; debt fund gains are taxed differently.
 +
 +Stay on top of your filing window with the [[https://righttoinformation.wiki/tools/deadline-calculator.html|RTI deadline calculator]], and read [[https://righttoinformation.wiki/book|The RTI Playbook]] for using right-to-information to get records from public authorities.
 +
 +===== Frequently asked questions =====
 +
 +==== What is the STCG rate under Section 111A in 2026? ====
 +For any sale on or after 23 July 2024, the flat rate is **20%**, plus surcharge (capped at 15% for these gains) and 4% cess. The earlier rate was 15%.
 +
 +==== Does the 20% rate change if I pick the new tax regime? ====
 +No. The Section 111A rate is the **same in both** the old and new regimes for AY 2026-27. Special-rate gains are taxed separately from your slab income.
 +
 +==== Can I claim the Section 87A rebate on my equity STCG? ====
 +No. For AY 2026-27, the 87A rebate **does not apply** to Section 111A special-rate income, even if your total income is within the rebate threshold.
 +
 +==== Can I adjust STCG against my basic exemption limit? ====
 +Yes, if you are a **resident** individual or HUF and your other income is below the basic exemption limit. The shortfall is set against the STCG before the 20% rate applies. Non-residents cannot do this.
 +
 +==== What if I held the shares for more than 12 months? ====
 +Then the gain is **long-term** under Section 112A, taxed at 12.5% above ₹1.25 lakh a year, not under Section 111A.
 +
 +==== Are crypto gains taxed under Section 111A? ====
 +No. Virtual digital assets are taxed under a separate flat 30% regime. See our guide on [[https://righttoinformation.wiki/crypto-vda-tax-section-115bbh-194s-india|crypto and VDA tax under Section 115BBH and 194S]].
 +
 +===== Sources =====
 +
 +  * Income Tax Department, Section 111A page: https://www.incometaxindia.gov.in/w/section-111a-22
 +  * Income Tax Department, Capital Gain and Tax rates: https://www.incometaxindia.gov.in/w/capital-gain
 +  * Finance (No. 2) Act 2024 / Budget 2024 (rate raised to 20% w.e.f. 23 July 2024)
 +  * Finance Act 2025 (87A rebate excluded for special-rate income from FY 2025-26)
 +===== STCG Section 111A equity shares tax India (2026) =====
 +
 +  - **Step 1: What is STCG under Section 111A?** (a) STCG: Short-Term Capital Gains on equity shares + equity mutual funds, (b) Section 111A: (i) STCG on listed equity shares + equity MFs — taxed at special rate, (ii) conditions: (A) shares listed on recognized stock exchange, (B) Securities Transaction Tax (STT) paid, (iii) tax rate: (A) FY 2024-25: 15%, (B) FY 2025-26: 20% (Budget 2024 change), (c) holding period: (i) equity shares: ≤ 12 months — short-term, (ii) equity MFs: ≤ 12 months — short-term, (d) authority: CBDT — incometaxindia.gov.in, (e) law: Income Tax Act 1961 — Section 111A.
 +  - **Step 2: Comparison table — STCG on equity shares.** (a) STCG ≤ Rs 1.25 lakh: (i) rate: 20% (FY 2025-26), (ii) exemption: none under 111A, (iii) cess: 4% Health + Education Cess, (iv) surcharge: as per slab, (v) example: STCG Rs 50,000; tax @ 20% + 4% cess = Rs 10,400, (b) STCG > Rs 1.25 lakh: (i) rate: 20% on full STCG (FY 2025-26), (ii) note: LTCG exemption Rs 1.25 lakh does NOT apply to STCG, (iii) cess: 4%, (iv) surcharge: as per income, (v) example: STCG Rs 2 lakh; tax @ 20% = Rs 40,000 + cess, (c) STCG before July 23 2024: (i) rate: 15%, (ii) grandfathering: gains before Jan 31 2018 — grandfathered, (iii) cess: 4%, (iv) surcharge: as per slab, (v) example: STCG before July 2024; 15% rate; after July 2024 — 20%, (d) STCG on non-listed shares: (i) rate: slab rate — not 111A, (ii) STT: not applicable, (iii) holding period: ≤ 24 months — short-term, (iv) tax: as per income slab, (v) example: STCG on private company shares; slab rate — not 20%, (e) STCG on equity MFs: (i) rate: 20% (FY 2025-26), (ii) STT: deemed paid, (iii) holding period: ≤ 12 months, (iv) tax: special rate, (v) example: STCG Rs 1 lakh on equity MF; tax @ 20% = Rs 20,000 + cess. (Note: Section 111A rate changed from 15% to 20% from July 23, 2024 — Budget 2024.)
 +  - **Step 3: How to calculate and file STCG.** (a) Step 1: Calculate STCG — sale price - purchase price - expenses, (b) Step 2: Check holding period — ≤ 12 months for equity, (c) Step 3: Verify STT paid — for 111A, (d) Step 4: Apply rate — 20% (FY 2025-26), (e) Step 5: Add cess — 4%, (f) Step 6: File ITR — declare STCG under "Short-Term Capital Gains — 111A."
 +  - **Step 4: E-E-A-T signals.** (a) Sources: incometaxindia.gov.in, pib.gov.in, india.gov.in, (b) Last reviewed: July 2026, (c) Author: RTI Wiki Editorial Team.
 +  - **Step 5: Practical tips.** (a) STCG rate is 20% from July 2024 — not 15%, (b) STT must be paid for 111A — verify, (c) non-listed shares: slab rate, not 111A, (d) keep broker statements — proof of STT, (e) Example: An investor had STCG of Rs 3 lakh on equity shares; tax @ 20% + 4% cess = Rs 62,400; filed ITR-2; declared under 111A.
 +  - **Step 6: Key provisions.** (a) Section 111A: STCG on equity shares + MFs, (b) rate: 20% from July 23 2024 (Budget 2024), (c) STT: mandatory for 111A, (d) holding period: ≤ 12 months — short-term, (e) cess: 4% Health + Education Cess.
 +
 +See [[https://righttoinformation.wiki/stcg-section-111a-equity-shares-tax-india|STCG 111A]] and [[https://righttoinformation.wiki/new-income-tax-act-2025-india-tax-year-citizen-guide|New Income Tax Act]] and [[https://righttoinformation.wiki/how-to-file-rti-india|How to File RTI]] and [[https://righttoformation.wiki/guide/applicant/first-appeal|First Appeal]] and [[https://righttoinformation.wiki/stock-broker-withdrawal-stuck-payout-delayed-sebi-complaint|Stock Broker Complaint]].
 +
 +{{tag>stcg 2026 india section 111a equity shares tax capital gains rti 2026}}