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If securities transaction tax (STT) was paid when shares were bought but not when they were sold (assuming sold within 12 months), will this be taxed @15% short-term capital gains tax (STCG)? 

Capital gains from the sale of short-term capital assets is taxed at 15% under section 111A of the Income Tax Act, 1961 if the following conditions are satisfied:

Gain is from transfer of equity share in a company, unit of equity-oriented fund or unit of business trust; and transaction of sale is after coming into force of Chapter VII of Finance (No. 2) Act, 2004 , which is 1 October, 2004; and such transaction is subjected to securities transaction tax or STT.

To answer your query, since the transaction is not subjected to STT at the time of sale, hence the capital gain shall be chargeable to tax at normal tax rates and not at 15%. To be able to take the benefit of lower taxation under section 111A, STT should be paid at the time of sale.

Answered by Shailesh Kumar, Partner, Nangia & Co LLP. Send you queries to

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