Short Term capital gains tax on shares sold within 12 months?



Please let me know if the amount received on the sale of shares held by me for less than 12 months and invested in other company shares, is still taxable? Can’t I avoid tax by using the money to purchase other company shares?

Short Term capital gains tax on shares sold within 12 months?
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5 Replies to “Short Term capital gains tax on shares sold within 12 months?”


  1. no, your presumption is incorrect. u have to pay tax on the short term capital gains( provided your total income for the year in more than rs 1,10,000 including short term capital gains ). no exemptions of any kind available.


  2. The below stated clarification is only applicable for shares sold through stock exchanges paying transaction tax.

    Shares in a company or any other security listed in a recognised stock exchange in India or a unit of a Unit Trust of India or a unit of a mutual fund specified under section 10(23D). It is held and sold before 12 months of holding, then are called short term capital gains and the tax on it is @10% flat rate.

    Your Q.1) Invested in other company shares, is still taxable?

    Ans: Yes, it is taxable. There is no exemption to adjust your gains like that. There is no other way except paying tax.

    Your Q.2) Can’t I avoid tax by using the money to purchase other company shares?

    Ans: No. You do what ever you like with the profits of short term capital gains. But you have to pay tax on the short term capital gains. You cannot avoid tax by purchasing another shares.

    You can pay lesser tax or nil tax if:-

    For example if you have no other income other than this short term capital gains, or your other income is below taxable income, then the short term capital gains income is not taxable up to your taxable limit. ( Male 1,10,000, female 1,45,000, Sen.Citizen 1,95,000). After the limit is over, then the balance income of short term capital gains are taxable at a flat rate of 10%.

    Example: (For male with 1,10,000 tax free income)
    1) Other income 2 lakhs, short term 1.5 lakhs= Full exemption limit covered by other income so Short term gains 1.5 lakhs are fully taxable @10% flat rate
    2) Other income 1 lakh, STCG 1.5 lakhs= Balance left in 1.1 lakhs exemption is Rs.10,000. So you have to pay tax @10% on STCG on Rs.1.4 lakhs inssted on 1.5 lakhs.
    3) Other income Nil, STCG 1.5 lakhs= Full amount of exemption 1.1 lakhs can be utilized and you have to pay STCG tax @10% on the balance Rs.40,000. (= Tax Rs.4,000)


  3. 10% of Profit + 3 % Education Cess . In case you had losses you can deduct that much from Profits . Use the site http://www.moneycontrol.com and in your portfolio you have option of Captital gains . By the way it is free service. I find it cool. Also this is one site which has all info on Share Bazar / MF etc






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