You need to understand the following rules for imposition of short term gains on equity shares that are listed on the stock exchange registered with SEBI:

1. Short term capital gains (STCG) on equity is taxed at a concessional rate of 15% of the gain but the condition for this is that the stock must have been purchased through a recognized stock exchange and STT must have been paid on the same.

2. STCG is defined in case of equity as a holding period of less than 1 year. Beyond that it is classified as long term capital gains.

3. In case of mutual funds, equity funds are treated at par with direct equities for tax purposes. The condition is that a mutual fund is classified as an equity fund if the equity exposure is more than 65%.

4. Short term capital losses arising out of equity can only be set off against short term capital gains and also against long term capital gains.