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Key Diffrence Long-Term vs Short-Term Capital Gains

What are Short and Long-Term Capital Gains?

List of Difference Between Short-Term and Long-Term Capital Gains

Take a look at the table comparing long-term vs short term capital gains:

Basis of Comparison Short Term Capital Gain Long Term Capital Gain
Definition  Profit gained from the sale of short-term capital assets is short-term capital gain. Long-term capital gain arises from the sale of long-term capital assets.
Status of the capital asset  Any capital asset, unlisted shares or land and buildings held for a period of not more than 24 months before transfer shall be treated as a short-term capital asset.

Additionally, listed securities, zero coupon bonds, and equity-oriented mutual funds need to be held for a period of less than 12 months to be classified as short-term capital assets.
Any capital asset, unlisted shares or land and buildings held for a period of more than 24 months before transfer shall be treated as a long-term capital asset.

Additionally, listed securities, zero coupon bonds, and equity-oriented mutual funds must be held for a period exceeding 12 months to be considered as long-term capital assets.
Market aspect Traders have a short-term market perspective and can sell over shorter periods, attaining quicker profit. Investors maintain a long-term market perspective, which brings them higher profits on selling their assets.
Profit attained Sellers may obtain lower profits because of the short holding period and assets are not well-established in the market. Sellers anticipate higher profit since the assets’ holding period is over a year and they are well-established in the market.
Risk involvement It involves lower risks as the holding period is relatively shorter. Investing in long-term assets involves higher risk because of the lengthy waiting period, the assets may become non-liquid later. 
Taxability 20% tax is applicable on short term capital gains that fall under section 111A, excluding surcharge and cess.

STCGs that do not fall under section 111A are taxable at a regular income tax rate.
12.5% tax is applicable on long term capital gains, excluding cess and surcharge. Also, as per Budget 2024, all indexation benefits have been removed.

How to Calculate Your Capital Gains After Budget 2024?

FAQs about Long & Short-Term Capital Gains