Hi. I am doing some activity of buy sale in stock markets. Stock exchange charges STT on my sale. Also I may have sold some equity mutual funds sale. Now listen, if all these sales are pretty short , that is, my holding period is upto 1 year viz 1 year or less, what I earn (sale less purchase) is short term capital gains Lets call this STCG-E. So this income is Special and is taxed at Special Rate, which is irrespective of the level of income.
So my tax rate on STCG-E is 15% for sales before 23-7-24, and 20% from 23-7-24. Two different rates in a year as budget was announced on this date this year.
You know this is both in Old and New Way of Tax. Further, if I did the Old Way, I cant get Deduction benefits (Chapter VIA popularly called) from STCG-E. I must pay taxes at these special rates.
But if my total income is below or upto exemption limit, I don’t need to pay tax at special rates on STCG-E, and I still get the benefit of exemption limit.