Should I pay equity STCG tax if my income is below the exemption limit? | Mint

In FY25, I have short-term capital gains (STCG) from equity of ₹30,000 and my salary is ₹2.58 lakh per annum. Do I need to pay STCG tax?

If you’re earning ₹2.58 lakh annually and made ₹30,000 in STCG from stocks in FY25, the answer depends on your tax regime and residential status.

Assuming you’re an Indian tax resident under 60 years of age and have no other income besides the ₹2.58 lakh salary and ₹30,000 STCG, you are eligible for the basic exemption limit applicable under your chosen tax regime.

Also read: For regular income in retirement, you can’t beat debt mutual funds

Under the old tax regime, you can claim a standard deduction of ₹50,000 from your ₹2.58 lakh salary, leaving a net salary income of ₹2.08 lakh. Add your ₹30,000 capital gains, and your total income becomes ₹2.38 lakh—well below the basic exemption threshold of ₹2.5 lakh. So, no tax is payable.

Under the new tax regime, you are eligible for a higher standard deduction of ₹75,000. That reduces your salary income to ₹1.83 lakh. Adding the ₹30,000 STCG, your total income is ₹2.13 lakh, which is below the ₹3 lakh basic exemption limit under the new regime. Again, no tax would be payable.

The situation changes if you’re a non-resident for tax purposes. In that case, you cannot claim the basic exemption limit against short-term capital gains on listed equity shares or equity mutual funds. So, even if your income is below ₹2.5 lakh or ₹3 lakh, STCG will be taxable and you won’t be eligible for rebates or standard deductions.

Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India.