How mutual funds are taxed: LTCG & STCG explained

How your mutual fund gains are taxed depends on two things: the type of fund (equity vs debt) and how long you held it.

Equity funds (≥65% in Indian stocks)

• STCG (held under 12 months): 20%.
• LTCG (held 12 months or more): 12.5% on gains above ₹1.25 lakh per financial year. Gains up to ₹1.25 L a year are tax-free.

Debt funds (bought on/after 1 April 2023)

All gains are added to your income and taxed at your slab rate, regardless of holding period — the old long-term and indexation benefits were removed.

Hybrid funds

Taxed like equity if they hold ≥65% equity; otherwise like debt. Check the fund's category.

The key point

Tax is charged only on gains, and only when you sell or switch — never while you stay invested. That's why long-term buy-and-hold is so tax-efficient. Want regular income tax-efficiently? See SWP.

→ See each fund's category on its detail page. (General information, not tax advice — confirm with a professional.)