LTCG (Long Term Capital Gains) — Mutual Fund Term Explained

Tax on mutual fund gains after the qualifying period. For equity: 12.5% on gains above ₹1.25 lakh/year after 1 year. For debt: slab rate.

LTCG tax applies when you redeem equity mutual fund units after more than 1 year. Gains exceeding ₹1.25 lakh per financial year are taxed at 12.5% (Budget 2024).

For debt mutual funds since April 2023: all gains are added to income and taxed at your slab rate, regardless of holding period.

Related terms

• STCG (Short Term Capital Gains) — Tax on equity fund gains if held less than 1 year. Flat 20% on any gain as per Budget 2024.
• ELSS (Equity Linked Savings Scheme) — An equity fund eligible for ₹1.5 lakh deduction under Section 80C. Mandatory 3-year lock-in per installment. Best tax-saving option with equity returns.
• Indexation — Adjusts your purchase cost for inflation using the Cost Inflation Index, reducing taxable gains. No longer available for debt funds (post-April 2023).
• Equity Fund — A mutual fund investing primarily (≥65%) in stocks. Highest long-term return potential but highest short-term volatility.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.