---
title: What’s the difference between STCG and LTCG?
description: "STCG (Short-Term Capital Gains) and LTCG (Long-Term Capital Gains) refer to the tax you pay on profits when you sell your investments such as **equity mutual funds, stocks, real estate, or other capital assets**. The key difference lies in the…"
url: "https://arafinserv.com/fa/withdrawals-loans-returns/whats-the-difference-between-stcg-and-ltcg/"
updated: "2025-11-20"
category: "Withdrawals, Loans & Returns"
---

# What’s the difference between STCG and LTCG?

STCG (Short-Term Capital Gains) and LTCG (Long-Term Capital Gains) refer to the tax you pay on profits when you sell your investments such as **equity mutual funds, stocks, real estate, or other capital assets**. The key difference lies in the **holding period** and the **tax rate**.

**1. Short-Term Capital Gains (STCG)**

STCG applies when you sell an asset **within a short holding period**, which varies by asset class.

- For **equity mutual funds and listed shares**, selling **within 12 months** leads to STCG.
- STCG on equity is taxed at a **flat rate of 20% + applicable cess and surcharge** (as per the updated tax regime).

STCG generally has **higher tax rates** because the investment is considered short-term and speculative.

**2. Long-Term Capital Gains (LTCG)**

LTCG applies when you hold the asset **beyond the specified period**—for equity funds and stocks, this is **more than 12 months**.

- On equity mutual funds, LTCG up to **₹****1,25,000 per financial year** is **tax-free**.
- Gains above this limit are taxed at **12.5% + cess and surcharge**.

LTCG attracts **lower taxes**, encouraging long-term investing.

Since tax rules are dynamic and subject to change, we recommend consulting your tax advisor for the latest and detailed guidance.