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# What are Short-term Capital Gains?

Capital gains are profits made from selling capital assets. Some examples of capital assets are land, property, jewelry, mutual funds, shares, and art & collectibles. As per income tax laws, you need to pay tax on any capital gains. The amount of tax depends on whether you've made short-term capital gains or long-term capital gains.

### Short-term Capital Gains in Detail

Short-term capital gains are the profits you make on selling of assets, which you have held for a short term as per income tax laws. The tax on short-term capital gains varies by the asset type.

### Calculation of short-term capital Gains Tax:

Based on asset type, there are two types of short-term capital gains:

• Short-term capital gains under section 111A
• Short-term capital gains outside of section 111A

### Short-term capital gains under section 111A:

Section 111A is applicable to any short-term gains made from investments in equity or equity-based mutual funds. For such instruments, short-term is considered as 1 year. As per Section 111A, such short-term capital gains are taxed at a flat rate of 15%.

Example 1: Say, you purchased shares of a certain company for ₹100,000 and sold them after 9 months for ₹150,000. Since you sold the shares within 1 year, this gain will qualify as a short-term capital gain under section 111A. In such a case, the short-term gain is ₹50,000 (₹150,000 less ₹100,000), and the short-term capital gain tax will be ₹7,500 (15% of ₹50,000).

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