What is the difference between STCG and LTCG in India?

For listed equity, gains on holdings sold within 12 months are short-term capital gains, while gains after more than 12 months are long-term capital gains. STCG on eligible equity is taxed at a higher rate than LTCG, which also gets the Rs 1.25 lakh annual exemption.

How do Indian investors optimise STCG versus LTCG?

Investors often try to defer a sale until it qualifies as long term when the investment thesis is unchanged. That can reduce the tax rate materially and also allow use of the LTCG exemption.

What should investors know about STCG and LTCG planning?

The holding period cutoff is critical, and the tax difference can be significant. Investors should compare tax savings with market risk, because holding longer only for tax reasons can still backfire if the stock price falls sharply.

Tax7 June 2026·7 min read

STCG vs LTCG: Which Tax Should You Optimise For First?

STCG is taxed at 20%, LTCG at 12.5% above ₹1.25L. The math on which to offset first is not obvious - here's the decision framework.

sHQ

stoicHQ Research Team

Ex-quants, IIT Delhi · Reviewed Jun 2026

In short

STCG (Short Term Capital Gains) on equity sold within 12 months is taxed at 20%. LTCG (Long Term Capital Gains) on equity held more than 12 months is taxed at 12.5% above ₹1.25L (exempt below). Always offset STCG losses against STCG gains first - the 20% rate makes STCG the more expensive tax.

STCG rate: 20% flat on equity (no exemption limit)
LTCG rate: 12.5% on gains above ₹1.25L (below that is tax-free)
Priority: offset STCG first - higher rate means bigger saving per rupee offset
Deferring a sale from month 11 to month 13 saves 7.5% on that gain

Tools & guides:STCG Calculator India →LTCG Calculator India →

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