Short-term capital gains tax regime tightened: higher flat rate for STT-eligible securities alters investor incentives and compliance obligations.
Clause 196 targets short term capital gains from equity shares, equity oriented fund units and business trust units that are chargeable to STT, imposing a flat tax on such gains while preserving normal taxation of remaining income. It limits concessional treatment to exchange based STT transactions, provides relief by reducing eligible STCG where other income falls below the basic exemption, excludes IFSC foreign currency transactions, and allows Chapter VIII deductions only after reducing gross total income by the specified STCG.