Let us take the example of a residential house. Mr. Paul sold his residential house after holding it for a period of 18 months. What will be the tax rate applicable on the STCG?

The gain in this case is not covered under section 111A as property gains are outside the purview of Section 111A. Hence, he will be charged to tax at normal rate applicable to Mr. Paul which will be a function of his income level and applicable tax slab. The normal rate applicable to Mr. Paul will be determined on the basis of his total income of Paul and depending on the slab that he falls under. Effectively, if he falls in the 30% bracket then that is the rate he needs to pay on the STCG. In addition, the cess has to be compulsorily paid and if his total taxable income exceeds Rs.50 lakhs or Rs.1 crore as the case may be, then the additional surcharge of 10% and 15% respectively would also be imposed.