Microlesson · 5-min read

Tax Rates on Short-Term Capital Gains - Section 111A

# Section 111A — Concessional Tax Rate on STCG (Listed Securities)

## Coverage

STCG taxable at 20% (concessional rate) if:

Asset is one of:
Equity shares (listed)
Unit of Equity Oriented Fund
Unit of Business Trust
STT has been paid on transfer

## Other STCG

All other STCG → Taxable at General (slab) Rate or applicable concessional rate.

## Key Points

1. No Chapter VI-A Deduction (80C, 80D etc.) is allowed against income taxed u/s 111A.

2. Benefit of Basic Exemption Limit is available only to a Resident Individual / HUF:

First adjusted against Other Income
Balance, if any, against Section 111A income

3. Non-residents do not get to adjust the basic exemption limit against 111A income.

Worked example

### Example 1

Example: Mr. A (resident, age 40) has: Salary income = ₹ 1,50,000; STCG u/s 111A = ₹ 2,00,000; Basic exemption (Old regime) = ₹ 2,50,000. Adjustment: ₹ 1,50,000 against salary; balance ₹ 1,00,000 used against STCG. Taxable STCG = ₹ 1,00,000 × 20% = ₹ 20,000.

⚠️ Common exam mistakes

Applying 15% rate (old rate before July 2024 amendment); current rate is 20%.
Allowing Chapter VI-A deductions against 111A income.
Allowing a non-resident to set off basic exemption against 111A income.

Bare-Act text Section 111A · Income Tax Act, 1961 · click to expand

Section 111A: Tax on short-term capital gains in certain cases — STCG on equity shares, units of equity oriented mutual funds, and units of business trust (subject to STT) shall be chargeable to tax at the rate of 20%.

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