# Special Rates of Capital Gains Tax

## Sec 111A — STCG on Listed Equity

Covers Short-Term Capital Gains on:
Equity Shares in a company
Units of Equity-Oriented Fund
Units of Business Trust
Condition: Transaction must be subject to STT.
Rate: 20%

## Other STCG

All Short-Term Capital Gains other than those covered under 111A are taxed at normal slab rates.

## Sec 112A — LTCG on Listed Equity

Covers Long-Term Capital Gains on:
Equity Shares in a company
Units of Equity-Oriented Fund
Units of Business Trust
Rate: 12.5% on LTCG exceeding ₹1,25,000 (first ₹1,25,000 is exempt).

## Sec 112 — Other LTCG

All other Long-Term Capital Gains (other than 112A).
Rate: 12.5%

## Important Notes

Chapter VI-A deductions are NOT available against these special incomes.
Basic exemption is available against these special capital gains for resident Individuals and HUFs under sections 111A, 112 and 112A — i.e., if other income is below the basic exemption limit, the shortfall can be adjusted against these capital gains.

Worked example

### Example 1

Example (Sec 112A): Mr. X has LTCG of ₹3,00,000 from sale of listed equity shares (STT paid). Taxable LTCG = ₹3,00,000 − ₹1,25,000 = ₹1,75,000. Tax = 12.5% × ₹1,75,000 = ₹21,875.

### Example 2

Example (Sec 111A): Mr. Y, a resident individual, has only STCG of ₹2,50,000 on listed equity shares and no other income. He can adjust the basic exemption limit (say ₹3,00,000 under new regime) against this STCG, and tax payable becomes Nil.

⚠️ Common exam mistakes

Forgetting the ₹1,25,000 exemption available under Sec 112A before applying 12.5%.
Claiming Chapter VI-A deductions (like 80C, 80D) against 111A/112/112A income — not allowed.
Not adjusting unutilised basic exemption against 111A/112/112A for residents — this benefit IS available.
Applying 12.5% on STCG under 111A — the correct rate is 20%.

Bare-Act text Sections 111A, 112, 112A · Income-tax Act, 1961 · click to expand

Sec 112A: Notwithstanding anything contained in section 112, where the total income of an assessee includes any income chargeable under the head 'Capital gains', arising from the transfer of a long-term capital asset being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust, the income-tax payable shall be the aggregate of (i) the amount of income-tax calculated on such long-term capital gains exceeding one lakh twenty-five thousand rupees at the rate of twelve and one-half per cent...

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →

Special Rates on Capital Gains

Worked example

⚠️ Common exam mistakes