Skip to main content

How are capital gains from equity mutual funds taxed?

 

How are capital gains from equity mutual funds taxed?

For equity mutual funds, the taxation of capital gains depends on how long you hold the units. If you hold them for less than 12 months, the profit is considered Short-Term Capital Gains (STCG) and is taxed at a rate of 20%. If you hold them for more than 12 months, the profit is Long-Term Capital Gains (LTCG). LTCG up to Rs. 1.25 lakhs is tax-free, and any LTCG exceeding this limit is taxed at 12.5%.

What is the holding period requirement for Long-Term Capital Gains (LTCG) in equity mutual funds?

To qualify for Long-Term Capital Gains (LTCG) status in equity mutual funds, you need to hold the units for more than 12 months.

What is the tax rate for Short-Term Capital Gains (STCG) from equity mutual funds?

Short-Term Capital Gains (STCG) from equity mutual funds, realized from holding units for less than 12 months, are taxed at a rate of 20%.

Is there a tax exemption for Long-Term Capital Gains (LTCG) from equity mutual funds?

Yes, Long-Term Capital Gains (LTCG) from equity mutual funds are tax-free up to a limit of Rs. 1.25 lakhs. Any LTCG above this threshold is taxed at 12.5%.

How is the holding period requirement different for debt mutual funds compared to equity mutual funds?

For debt mutual funds, a longer holding period is required to qualify for LTCG status compared to equity funds. If you hold debt fund units for less than 36 months, the gains are considered STCG.

How are capital gains from debt mutual funds taxed?

Both Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG) from debt mutual funds are taxed at the individual's income tax slab rate. This means the tax rate varies depending on your total taxable income.

What is the tax rate for both STCG and LTCG in debt mutual funds?

Unlike equity funds which have specific fixed rates for STCG and LTCG (above a threshold), both STCG and LTCG from debt mutual funds are taxed at your individual income tax slab rate, which is determined by your overall taxable income.

Do Funds of Funds (FOFs) have different holding periods and tax rates?

Yes, the source indicates that Funds of Funds (FOFs) have specific holding periods and tax rates that may differ from individual equity or debt funds.

Labels:

Popular posts from this blog

Save Tax Legally With HUF

  What is a Hindu Undivided Family (HUF)? A Hindu Undivided Family (HUF) is a separate legal entity recognized under Indian tax law, allowing families following Hindu, Jain, Sikh, and Buddhist laws to collectively own property and manage income. It serves as a tool for family wealth management and potential tax optimization. What is the difference between a member and a coparcener in an HUF? A member of an HUF is any individual part of the family through lineal descent, marriage (for wives of male coparceners), or adoption. Members have the right to maintenance from the HUF property but generally cannot demand partition. A coparcener, on the other hand, is a member with a birthright in the joint family property. Under the Hindu Succession (Amendment) Act, 2005, both sons and daughters are coparceners by birth, with rights including demanding partition, joint ownership, limited alienation rights, and the right to question the Karta's actions. How is an HUF formed? Forming ...
Read more

Why Most Businesses Fail

Why Most Businesses Fail: A Practical Q&A on Financial Management 90% of business failures aren’t about poor products or bad luck. They’re about financial missteps. Here's how to avoid them. Q1: Why do most businesses fail? A: The #1 cause is poor financial management. Not sales. Not product quality. Not HR. Over 90% of business closures happen because founders and teams misunderstand or ignore finance fundamentals. Example: A company may keep selling aggressively without realizing it’s burning cash faster than it's earning. No amount of sales saves you from poor cash flow planning. Key Insight: Finance isn’t just for accountants. It’s embedded in every business decision, big or small. Q2: Accounting vs. Financial Management — What’s the difference? A: Accounting records what happened. Financial management decides what should happen next. Accounting = History. Financial Management = Strategy. Example: Your accountant shows...
Read more

Making Gold Work for You: Beyond the Locker

💰 Making Gold Work for You: Beyond the Locker ❓ Bank Lockers vs. Gold Monetisation Scheme (GMS) Q1: Is storing gold in a bank locker really safe? 👉 Not entirely. While lockers are secure from theft, they’re not immune to natural disasters . Example: Lovish Anand, a financial advisor, shared a real story—his friend’s heirloom jewelry rusted during a flood when water seeped into her basement locker . The insurance? Only ₹3 lakh— far less than the actual value. 🔍 Key Insight: Most bank locker insurance barely covers the real worth of your gold. Q2: What exactly is the Gold Monetisation Scheme (GMS), and how does it help? ✅ GMS lets you deposit unused gold (jewelry, bars, coins) with authorized banks. In return, you earn interest (2.25–2.5%) and keep it safe from physical damage. 📦 Your gold is: Tested for purity Weighed and recorded Secured without deterioration or theft risk 🧠 Think of it like this: Instead of gold s...
Read more