Short-term and Long-term Capital Assets

Short-Term Capital Asset — Section 2(42A)

A capital asset held by an assessee for NOT MORE THAN a specified period immediately preceding the date of its transfer is a Short-Term Capital Asset. The specified period is:

• 12 months — for listed equity shares, listed preference shares, other listed securities, units of UTI, units of an equity-oriented mutual fund, and zero-coupon bonds.
• 24 months — for every OTHER capital asset, including unlisted shares, immovable property (land or building), jewellery, gold, and unlisted securities.

An asset held for MORE than its applicable specified period is a Long-Term Capital Asset [Section 2(29A)], and the gain on its transfer is a Long-Term Capital Gain (LTCG). An asset held for not more than the specified period gives a Short-Term Capital Gain (STCG) on transfer.

AY 2026-27 grounding — holding-period thresholds

This two-tier 12-month/24-month test was introduced by the Finance (No. 2) Act, 2024 (replacing an earlier three-tier 12/24/36-month structure) and remains the applicable test for Assessment Year 2026-27. Holding-period thresholds are periodically revised by Finance Acts — always confirm the threshold actually in force for the year a real problem relates to before answering.