STCG means short-term capital gains. The asset was held for not more than the period in section 2(101). For listed equity and a listed gold ETF that period is 12 months. For physical gold, jewellery, and property it is 24 months. Sell on the anniversary and the gain is still short-term.
Two different taxes sit under that one label, and mixing them up is the usual mistake.
Listed equity shares and equity-oriented fund units, when securities transaction tax was paid, are section 196 of the Income-tax Act, 2025. The rate is 20%, then cess. This is not your slab. It does not become 5% or 30% because the rest of your income is small or large. Before 1 April 2026 this rate lived in section 111A of the 1961 Act.
Other short-term gains are added to your income and taxed in the slabs. That includes physical gold sold within 24 months, a house sold within 24 months, and a debt fund bought on or after 1 April 2023. The new-regime slabs are section 202. The old regime has its own slabs. The regime you choose does change this second kind of STCG.
A resident whose other income sits below the nil slab can use the rest of that nil band against a section 196 gain. The ₹1,25,000 exemption is only for long-term equity under section 198. It does not reduce STCG. A loss of this kind can be set off against some other gains. The calculator applies the set-off rules it is built for. It does not invent a loss you did not make.
A worked example
Listed equity bought on 1 August 2025 for ₹1,00,000 and sold on 15 June 2026 for ₹1,40,000 is still inside 12 months. With ₹15,00,000 of other income in the new regime, the gain is ₹40,000. Tax on that gain before cess is ₹8,000, which is 20% of ₹40,000. The extra tax on the return, cess included, is ₹8,320. There is no ₹1,25,000 knocked off first.
Mistakes people make
- Using 20% on a gold coin or a flat. Those use your slab when the holding is short.
- Knocking ₹1,25,000 off a short-term share sale.
- Treating the 12-month anniversary as long-term.
- Assuming the new regime’s lower slabs replace section 196. They do not.
- Comparing a short-term gold gain with a friend’s equity STCG as if the rate were the same.
The section
Section 2(101) is the clock (the holding test in the new Act). Section 196 is the 20% equity rate (this was section 111A). Slab gains go through section 202 in the new regime (this was section 115BAC).
Use the capital gains calculator for the rate, and the income tax calculator when the gain falls into the slabs. The capital gains guide puts both kinds on one page.
Questions
Is every short-term gain taxed at 20%?
No. Listed equity and equity-fund units are section 196 at 20% when securities transaction tax was paid. Physical gold, a house, and most other assets are added to your income and taxed in the slabs.
Does the ₹1.25 lakh equity exemption reduce STCG?
No. ₹1,25,000 is only for long-term equity under section 198. A short-term share sale does not use it, even in a year when you also have a long-term gain.
Does the tax regime change equity STCG?
The 20% rate itself does not change between regimes. A short-term gain on gold or a house does change, because that gain is taxed in the slabs of the regime you file.
Sources
Figures checked 28 Oct 2026.