For the sake of simplicity, let us take the case of Barry John who is a salaried employee in a private limited company. In the month of December 2015, he purchased 100 preference shares of Jetking Ltd. at Rs 100 per share. These shares were sold in August 2016 at Rs 125 per share. Can the capital gain be termed as STCG covered under section 111A?

Section 111A is applicable in case of STCG arising on transfer of equity shares which were transferred on or after 1/10/2004 through a recognised stock exchange and such transaction is liable to STT. In the given case the shares are preference shares and hence, the provisions of section 111A are not applicable and such gain will be treated as normal STCG taxed according to slab rates. This will be the applicable rule for a one point purchase versus a one point sale of shares.