General

How are Capital Gains Taxes charged?

For FY 2024-25

How are Capital Gains Taxes charged?

Mutual Fund investments are subject to capital gains tax. Capital gains tax is further classified depending on period of holding and is different for equity and debt funds.

1. Funds with Indian Equity exposure is at least 65% e.g., Equity Funds, Equity Oriented Hybrid Funds:

• Long-Term Capital Gains (LTCG) tax - Holding period of one year or more is considered long-term and LTCG tax of 12.5% is applicable on equity funds if the cumulative capital gains from equity mutual funds & stocks in a financial year exceeds INR 1.25 lakh.
• Short-Term Capital Gains (STCG) tax - Profits on holdings of less than a year are subject to 20% STCG tax in equity funds.

2. Funds with Indian Equity exposure does not exceed 35% of the corpus e.g., Debt Funds, Debt Oriented Hybrid Funds:

• Irrespective of the holding period, all capital gains are treated as short term capital gains and taxed at applicable slab rates

3. Funds with Indian Equity exposure exceeds 35% but does not exceed 65%

• Investments in these schemes become long-term if held for more than 24 months and taxed at a flat rate of 12.5%
• For period till 24 months, short term capital gains will be applicable. Short-term capital gains for this category are treated like regular income and taxed at the slab rate applicable.

For FY 2025-26

How are Capital Gains Taxes charged?

Mutual Fund investments are subject to capital gains tax. Capital gains tax is further classified depending on period of holding and is different for equity and debt funds.

1. Funds with Indian Equity exposure is at least 65% e.g., Equity Funds, Equity Oriented Hybrid Funds:

• Long-Term Capital Gains (LTCG) tax - Holding period of one year or more is considered long-term and LTCG tax of 12.5% is applicable on equity funds if the cumulative capital gains from equity mutual funds & stocks in a financial year exceeds INR 1.25 lakh.
• Short-Term Capital Gains (STCG) tax - Profits on holdings of less than a year are subject to 20% STCG tax in equity funds.

2. Funds investing 65% or more in debt-based securities of the corpus e.g., Debt Funds, Debt Oriented Hybrid Funds:

• Irrespective of the holding period, all capital gains are treated as short term capital gains and taxed at applicable slab rates

3. Funds with Indian Equity exposure less than 65% and funds investing less than 65% in debt securities.

• Investments in these schemes become long-term if held for more than 24 months and taxed at a flat rate of 12.5% .
• For period till 24 months, short term capital gains will be applicable. Short-term capital gains for this category are treated like regular income and taxed at the slab rate applicable.