Should You Pay Tax When Short-Term Capital Gains Are Your Only Income?

Short-term capital gains arise when assets such as shares, mutual funds, or property are sold within a specified holding period. For listed equity shares and equity mutual funds, gains held for less than 12 months are classified as STCG and taxed at a flat 15%. For other assets, gains within 24 months are taxed at your applicable income tax slab rate.  

Even if STCG is your only income, you are required to file an income tax return. If your total taxable income (including STCG) exceeds the basic exemption limit, tax liability applies. However, if your income is below the exemption threshold, you may not owe tax, though filing returns is still advisable to carry forward losses or claim refunds.  

Budget 2026 has proposed further clarity on capital gains taxation, including buybacks being treated as capital gains. Experts suggest aligning holding periods and simplifying rules to reduce confusion for taxpayers.  

Key Highlights  

• STCG on listed equity taxed at 15%  
• Other assets taxed as per income slab  
• Mandatory filing even if STCG is sole income  
• Exemption applies if income below threshold  
• Budget 2026 proposes buyback taxed as capital gains  

Sources: ClearTax, The Economic Times, MoneyControl