Understanding STCG, LTCG, and Their Tax Implications for FY 2025

1. Short-Term Capital Gains (STCG)

Definition:

• STCG applies to gains from listed equity shares and equity-oriented mutual funds held for 12 months or less.

• 20%, provided the Securities Transaction Tax (STT) is paid.

• Short-Term Capital Losses (STCL) can offset both STCG and LTCG in the same financial year.
• Any unused losses can be carried forward for 8 years.

2. Long-Term Capital Gains (LTCG)

Definition:

• LTCG applies to gains from listed equity shares and equity-oriented mutual funds held for more than 12 months.

• Gains exceeding ₹1.25 lakh annually are taxed at 12.5% (revised from 10%).

• The exemption limit has increased from ₹1 lakh to ₹1.25 lakh annually for listed equity shares and equity-oriented mutual funds.
  
  

3. Holding Period Rules Simplified

 For listed equity shares:
- STCG applies if held for 12 months or less.
- LTCG applies if held for more than 12 months.

For equity-oriented mutual funds:
- STCG applies if held for 12 months or less.
- LTCG applies if held for more than 12 months.

Key Takeaways for FY 2025

• STCG tax rate: 20%.
• LTCG tax rate: 12.5% for gains exceeding ₹1.25 lakh.
• Exemption limit: Increased to ₹1.25 lakh.
• Loss Carry Forward: Short-term and long-term losses can be carried forward for 8 years.

Start planning your tax strategies today to minimize your liabilities and maximize your investment returns!