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How to Calculate Short-Term Capital Gain (STCG) Tax?
Last Updated: 16th December 2025 - 10:52 am
If you actively trade in shares or invest in mutual funds, understanding how to calculate short term capital gain is essential. Short-term capital gains (STCG) apply when you sell an asset within a year of purchase, and knowing the rules helps you plan your trades better and avoid unexpected taxes. Many investors focus only on their profit, but the actual short term capital gains tax can affect the final amount you take home.
The STCG calculation is very simple and easy to understand: subtract the purchase cost and related charges from the selling price to get your short term gain. Unlike long term gains, STCG does not allow indexation, so the taxable amount is simply your net profit.
For equity transactions, the stock STCG calculation is easy to follow. Only the profit is taxed, not the total value of the transaction. Costs such as brokerage, Securities Transaction Tax (STT), and other charges reduce the actual gain, so your final taxable amount is usually slightly lower than the difference between buying and selling prices. Running a STCG example with your own trade data helps clarify exactly how much tax will apply.
For other assets, such as debt funds or property sold within two years, STCG is added to your total income and taxed according to your income slab. Knowing these nuances allows investors to plan better and make informed decisions on selling or holding assets.
Understanding how to calculate short term capital gain empowers you to make smarter investment choices. You can evaluate whether selling early is worthwhile or if holding longer reduces tax impact. With clarity on short term capital gains tax and proper planning, your investment returns become more predictable and tax efficient.
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