Mutual Fund investments are subject to capital gains tax, which is paid on the profit made when redeeming or selling Mutual Fund units. The gain is calculated as the difference between the Net Asset Value (NAV) at the time of sale and the purchase (Selling Price - Purchase Price). Capital gains tax is further classified depending on the holding period.
Equity Funds (funds with equity exposure ≥65%):
- Holding Period:
- Less than 12 months: Short-term
- 12 months or more: Long-term
- Tax Rates:
- Short-Term Capital Gains (STCG): 20%
- Long-Term Capital Gains (LTCG): Gains up to INR 1.25 lakh are exempt; any amount above is taxed at 12.5%
