Understanding STT: Differences Between Section 111A and 112A Explained

Explore the key differences between STT under section 111A and 112A, focusing on taxation of short-term and long-term capital gains.

1,134 views

STT (Securities Transaction Tax) under section 111A applies to short-term capital gains from equity shares or equity-oriented mutual funds. These gains are taxed at 15%. Section 112A deals with long-term capital gains exceeding ₹1 lakh from similar securities, taxed at 10% without indexation benefits. Both ensure efficient tax compliance while differentiating based on the holding period.

FAQs & Answers

  1. What is Securities Transaction Tax (STT)? Securities Transaction Tax (STT) is a tax levied on transactions made on the stock exchange for buying and selling securities. It is applicable to both equity shares and equity-oriented mutual funds.
  2. How is STT calculated under section 111A? Under section 111A, STT is applicable to short-term capital gains from equity shares or equity-oriented mutual funds, which are taxed at a rate of 15%.
  3. What are the tax implications of long-term capital gains under section 112A? Section 112A applies to long-term capital gains exceeding ₹1 lakh from equity shares or mutual funds, taxed at 10% without indexation benefits, which allows for efficient tax compliance.
  4. What is the holding period for capital gains tax under sections 111A and 112A? For section 111A, the holding period must be less than 12 months to classify as short-term capital gains. In contrast, section 112A applies to assets held for more than 12 months, qualifying them for long-term capital gains taxation.

Watch More

For those looking to deepen their understanding of capital gains taxation, we recommend checking out our related content on 'Tax Planning for Investors' and 'Understanding Capital Gains Tax in India'. These resources will further equip you with knowledge to navigate the tax implications of your investments effectively.

  1. Understanding LTCG Tax Rates: Section 112 vs 112A Explained Learn about LTCG tax rates under Sections 112 and 112A, including key distinctions for investors.
  2. Understanding Section 112 of the Income Tax Act: Tax Implications on Long-Term Capital Gains Discover how Section 112 of the Income Tax Act affects long-term capital gains tax rates for investments.
  3. Understanding Section 194A of the Income Tax Act: TDS on Interest Explained Explore Section 194A of the Income Tax Act concerning TDS on interest payments, essential for tax compliance.
  4. Understanding Exemptions Under Section 194A of the Income Tax Act Learn about the exemptions for TDS on interest income under Section 194A, including details on eligible entities and forms.
  5. Understanding Section 194A of the Income Tax Act: Key Changes Explained Learn about Section 194A of the Income Tax Act and its recent amendments affecting TDS on interest payments.
  6. Understanding Section 193 of the Income Tax Act: TDS on Interest Learn about Section 193 of the Income Tax Act and its implications for TDS on interest payments. Essential for tax compliance.
  7. Difference Between Section 192 and 194A: Tax Deduction Explained Discover the key differences between Section 192 and 194A for TDS on salary and interest payments.