STCG (Short-Term Capital Gains) applies when you sell unlisted shares held for 24 months or less. Unlike the flat rate on listed-share STCG, gains on unlisted shares are added to your total income and taxed at your income-tax slab rate.
Tax rate
STCG on unlisted shares = taxed at your income-tax slab rate
This can reach 30% for the highest bracket, plus surcharge and cess — an effective rate above 35% for top earners. This makes a sub-24-month hold significantly more expensive than waiting for LTCG treatment.
Practical implication
If you are approaching the 24-month mark with a large paper gain, it often makes sense to wait. The tax saving from month 24 vs month 23 can be very meaningful on a large position.
Example: A ₹5 lakh gain on shares sold at 20 months triggers STCG at 30% = ₹1.5 lakh tax. Waiting 4 months → LTCG at 12.5% = ₹62,500 tax. The ₹87,500 saving outweighs most holding-period risks. Related: capital gains tax on unlisted shares.