How Mutual Funds Are Taxed in India: LTCG, STCG, TDS and Everything Else

Equity MFs: 20% tax under 12 months, 12.5% on gains above ₹1.25 lakh over 12 months. Below ₹1.25 lakh is tax-free. Debt funds: taxed at your income slab rate, holding period irrelevant. Gold ETFs: STCG at slab rate under 12 months, LTCG at 12.5% over 12 months. Budget 2024 sets these rates. Budget 2026 changed nothing.

Most investors spend hours picking the right mutual fund. Almost none of them spend ten minutes understanding what happens at the other end when they exit.

That gap is expensive.

Mutual fund taxation in India changed twice in two years. Budget 2024 revised the STCG and LTCG rates on equity funds. The Finance Act 2023 removed the biggest tax advantage debt funds ever had. And yet most guides circulating online still carry outdated numbers, outdated rates, and outdated advice.

This guide fixes that. Everything here is verified as of April 2026. Budget 2026, presented in February 2026, made no changes to mutual fund capital gains tax rates. The rates you read here apply to FY 2025-26 and FY 2026-27. This article is part of our complete guide to mutual funds.

This content is for educational purposes only and does not constitute investment advice. Please consult a SEBI-registered financial advisor before making investment decisions.

What Is Capital Gains Tax on Mutual Funds?

When you sell (redeem) mutual fund units at a price higher than what you paid, the profit is a capital gain. The government taxes that gain. How much you pay depends on which type of fund you hold and how long you held it before selling.

Capital gains are taxed separately from salary income. In many cases, the rates are lower. This is the core reason why investing through mutual funds is more tax-efficient than earning the same amount as salary or interest income, provided you understand the rules and plan your exits.

The Two Variables That Decide Your Tax on Mutual Funds

Every mutual fund redemption in India involves tax on mutual funds determined by exactly two inputs.

Variable 1: What Type of Fund Is It?

SEBI classifies mutual funds by their asset allocation. Equity-heavy funds attract different rates than debt-heavy funds. Gold funds fall into their own category.

Get the fund type wrong, and your entire mutual fund tax estimate is off.

Variable 2: How Long Did You Hold the Units?

For equity-oriented funds, the key to mutual fund tax planning is the holding period. Under 12 months means you pay the higher short-term rate. Twelve months or more gives you the lower long-term rate plus an annual exemption of ₹1.25 lakh.

For debt funds, holding period no longer matters. Every gain is taxed at your income slab rate, whether you held for 3 months or 10 years. The Finance Act 2023 eliminated the long-term benefit that used to make debt funds genuinely tax-efficient.

For gold funds and gold ETFs, the holding period does matter from FY 2025-26. Gold ETFs qualify for LTCG at 12.5% after 12 months. Gold FoFs qualify after 24 months. Short-term gains are taxed at your income slab rate.

Mutual Fund Tax Rates at a Glance: The Complete Reference Table

This table covers every fund type and every scenario for mutual fund taxation in FY 2025-26 and FY 2026-27. Both years carry identical rates. Budget 2026 confirmed no changes.

Fund Type	Holding Period	Gain Type	Tax Rate
Equity MF (large-cap, mid-cap, small-cap, flexi-cap, ELSS)	Under 12 months	STCG	20%
Equity MF	12 months or more	LTCG	12.5% on gains above ₹1.25 lakh
Hybrid MF (equity above 65%)	Under 12 months	STCG	20%
Hybrid MF (equity above 65%)	12 months or more	LTCG	12.5% on gains above ₹1.25 lakh
Debt MF, Specified (debt above 65%)	Any duration	Slab income	Your income tax slab rate
Hybrid MF (debt above 65%)	Any duration	Slab income	Your income tax slab rate
Hybrid MF (equity 35 to 65%, debt 35 to 65%)	Under 12/24 months†	STCG	Slab rate
Hybrid MF (equity 35 to 65%, debt 35 to 65%)	Over 12/24 months†	LTCG	12.5% (no ₹1.25L exemption)
Gold ETF (listed units)	Under 12 months	STCG	Slab rate
Gold ETF (listed units)	12 months or more	LTCG	12.5% (no ₹1.25L exemption)
Gold MF / FoF (unlisted)	Under 24 months	STCG	Slab rate
Gold MF / FoF (unlisted)	24 months or more	LTCG	12.5% (no ₹1.25L exemption)

Source: Union Budget 2024 (July 2024). Finance Act 2023. Finance (No.2) Act 2024. Budget 2025 (February 2025). Budget 2026 (February 2026) confirmed no changes to equity MF rates. Section 111A, Section 112A, and Section 50AA, Income Tax Act.

Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing. Past performance is not indicative of future results.

Equity Mutual Fund Taxation: STCG, LTCG and How Each Works

Equity mutual funds include large-cap, mid-cap, small-cap, flexi-cap, multi-cap, sectoral, thematic, and ELSS funds. Any hybrid fund maintaining over 65% equity also falls under this category for taxation. These are the funds most Indian investors hold, and their tax on mutual funds is governed by Section 111A and Section 112A of the Income Tax Act.

Short-Term Capital Gains Tax on Equity Funds

Redeem equity MF units held for less than 12 months, and you pay short-term capital gains tax. The STCG rate on equity mutual funds is 20%, effective from 23 July 2024, as per the Union Budget 2024.

This is the same rate that applies to short-term capital gain on shares traded on Indian stock exchanges. Budget 2024 aligned equity MF and direct equity STCG treatment.

There is no minimum exemption for STCG. You owe 20% from the first rupee of short-term profit.

Why the 12-Month Mark Changes Everything

A ₹60,000 short-term equity MF gain costs ₹12,000 in tax. Had those same units been held 12 months or more, and if the person had no other equity gains that year, the tax bill would be zero. That is the full ₹1.25 lakh annual LTCG exemption absorbing the entire gain.

One holding period decision. Thousands of rupees.

💡 Know this: Switching from one equity fund to another is a taxable event, even if you never touched your bank account. Moving from a large-cap fund to a flexi-cap fund counts as: (1) redeeming the large-cap fund (triggers STCG or LTCG on any gains), then (2) buying the flexi-cap fund fresh (new holding period starts). Many investors switch funds chasing performance without realising they just handed the government a 20% cut of their short-term gains.

LTCG Tax Rate on Equity Mutual Funds

Units held for 12 months or more generate long-term capital gains. Equity mutual fund tax on long-term gains is 12.5% on net gains above ₹1.25 lakh in a financial year, governed by Section 112A of the Income Tax Act.

Two numbers changed in Budget 2024: the long-term capital gain tax rate moved up from 10% to 12.5%, and the annual exemption moved up from ₹1 lakh to ₹1.25 lakh. For investors with modest gains, the higher exemption partially offsets the higher rate.

The long-term capital gain exemption of ₹1.25 lakh is a combined annual limit across all equity MF redemptions. This is one of the few genuine reliefs built into the mutual fund tax structure. Sell units from five different equity funds in the same financial year, and the combined gain from all five is measured against the single ₹1.25 lakh threshold.

The Section 87A Rebate Exception: What Almost Nobody Tells You

Under the new tax regime, individuals with total income up to ₹12 lakh pay zero tax due to the Section 87A rebate. Many young investors assume this means their equity MF gains are also tax-free if their total income stays under ₹12 lakh. That assumption is wrong.

LTCG from equity mutual funds (taxed at special rates under Section 112A) is excluded from the Section 87A rebate. So if you earn ₹10 lakh in salary and ₹2 lakh in equity MF LTCG, your salary income is effectively rebated to zero.

But the ₹2 lakh LTCG still attracts 12.5% on the amount above ₹1.25 lakh, which equals ₹9,375 in tax. Knowing this prevents a nasty surprise at ITR filing time.

💡 Know this: The Section 87A rebate does not cover LTCG from equity mutual funds, even if your total income is well below ₹12 lakh. Always calculate your equity MF gains separately when estimating tax liability for the year. The rebate only covers income taxed at normal slab rates, not income taxed at special rates under Section 112A.

A Worked LTCG Calculation

Priya is a 32-year-old marketing manager in Bengaluru earning ₹13 LPA. She invested ₹5 lakh as a lumpsum in a mid-cap fund in January 2023 and redeemed ₹8.5 lakh in April 2025, generating a gain of ₹3.5 lakh. Holding period exceeds 12 months, so LTCG applies.

Tax calculation:

• Total gain = ₹3.5 lakh
• Annual LTCG exemption = ₹1.25 lakh
• Taxable LTCG = ₹2.25 lakh
• Tax at 12.5% = ₹28,125

Had Priya split the redemption across two financial years (redeeming ₹1.25 lakh gain before 31 March 2026 and the remaining ₹1.25 lakh gain after 1 April 2026), her total LTCG tax on the same ₹2.5 lakh of gains would have been zero. That is ₹28,125 saved from one timing decision.

Mutual fund investments are subject to market risks. Past performance is not indicative of future results.

ELSS Funds: Tax on Redemption After the 3-Year Lock-in

ELSS (Equity Linked Savings Scheme) funds are equity mutual funds with a mandatory 3-year lock-in from each investment date. The mutual fund tax on ELSS redemption after lock-in is 12.5% on gains above ₹1.25 lakh under Section 112A.

The 80C deduction on ELSS (up to ₹1.5 lakh) applies at the time of investment and only under the old tax regime. The LTCG tax at exit applies under both regimes. How ELSS helps you save tax under Section 80C is covered in full in our dedicated ELSS guide.

One detail that catches SIP investors off guard: each instalment has its own 3-year lock-in from its individual investment date. Here is how that works in practice:

SIP Instalment Date	Earliest Redemption Date
January 2022	January 2025
April 2022	April 2025
July 2022	July 2025
January 2023	January 2026

You cannot redeem the full ELSS corpus at once after 3 years if you invested via SIP. Only instalments older than 3 years are eligible at any given time.

Debt Mutual Fund Taxation: Everything Changed in April 2023

Debt fund taxation in India is no longer what most investors remember. Here is what the rules actually say today.

Until 31 March 2023, debt mutual fund taxation was one of India’s most investor-friendly tax structures. Hold for more than 3 years, and you could apply indexation (a government-approved method that adjusts your purchase cost upward for inflation, reducing the taxable gain) to bring your effective tax close to zero.

The Finance Act 2023 ended this entirely.

What the Finance Act 2023 Did

From 1 April 2023, all debt MF gains are taxed at the investor’s applicable income tax slab rate. No indexation. No long-term rate. No distinction between 3 months and 10 years.

The holding period is now irrelevant for debt fund taxation under Section 50AA of the Income-tax Act.

This is what debt fund taxation looks like today across different income levels:

Income Tax Slab (New Regime, FY 2025-26)	Debt MF Tax Rate on All Gains
0% (income up to ₹4 lakh)	0%
5% (₹4 lakh to ₹8 lakh)	5%
10% (₹8 lakh to ₹12 lakh)	10%
15% (₹12 lakh to ₹16 lakh)	15%
20% (₹16 lakh to ₹20 lakh)	20%
25% (₹20 lakh to ₹24 lakh)	25%
30% (above ₹24 lakh)	30%

Source: Finance Act 2023. Union Budget 2025 (February 2025) for new regime slab rates.

Which Debt Funds Does This Cover?

All of them. Liquid funds, overnight funds, ultra short-term funds, low duration funds, short-duration funds, medium-term debt funds, corporate bond funds, gilt funds, credit risk funds, banking and PSU debt funds, and fixed maturity plans.

Any fund that does not maintain over 65% equity allocation falls under this rule. Conservative hybrid funds and some balanced hybrid funds with lower equity weights also attract slab-rate taxation.

The Post-Tax Reality for a 30% Bracket Investor

Rohit is a 38-year-old chartered accountant in Mumbai in the 30% tax bracket. He holds ₹15 lakh in a corporate bond fund earning 7.5% annually.

Over 3 years, his fund has generated roughly ₹3.6 lakh in gains. At 30% slab rate, his tax bill is approximately ₹1.08 lakh.

His post-tax return drops from 7.5% to roughly 5.25% per year. A fixed deposit offering 7% at the same bank delivers a nearly identical post-tax return. The debt fund tax treatment that made debt MFs meaningfully better than FDs for long-term, higher-bracket investors is gone.

💡 Know this: Debt MFs are not useless after this change. They still give you better liquidity than FDs (no premature withdrawal penalty), no TDS unless IDCW payouts cross ₹10,000 per year per AMC, and potentially better pre-tax returns from active management. The rule change hurts investors in the 20% to 30% bracket the most. If you are in the 10% bracket or below, debt MFs can still make better post-tax sense than FDs with better rates.

Hybrid Fund Taxation: Why the 65% Rule Matters

Hybrid mutual funds split their portfolio between equity and debt. Their mutual fund tax treatment is determined by one number: the equity allocation percentage.

The 65% Threshold: How It Works

If a fund maintains over 65% of its portfolio in equity instruments (as stated in the Scheme Information Document), it is treated as equity-oriented for taxation. STCG at 20% applies to units held under 12 months. LTCG at 12.5% on gains above ₹1.25 lakh applies for units held over 12 months.

Drop below 65% equity, and the entire fund flips to debt treatment in terms of mutual fund tax. All gains become taxable at the investor’s income slab rate, regardless of how long you held.

The Specific Problem With Balanced Advantage Funds

Balanced advantage funds and dynamic asset allocation funds move their equity allocation actively based on market valuations. A fund might run 75% equity in a bull phase and pull back to 55% equity during a market correction. The tax treatment can therefore shift without any action from you.

Always check the fund’s latest factsheet before planning a redemption. The 65% threshold is assessed based on actual portfolio composition, not the broad category the fund belongs to.

💡 Know this: A balanced advantage fund that shows 68% equity today can drop to 58% next quarter. That quarter, your redemption could be taxed at your 20% to 30% slab rate instead of the 12.5% LTCG rate you expected. Before redeeming any hybrid fund, check the latest monthly factsheet. One minute of checking saves you the difference between a 12.5% LTCG mutual fund tax bill and a 30% slab-rate bill on the same gain.

Gold Mutual Fund and ETF Taxation

The taxation of gold funds changed materially as of FY 2025-26, and most online guides have not caught up with this.

Until FY 2024-25, gold ETFs and gold FoFs were treated as “specified mutual funds” under Section 50AA. All gains were taxed at the investor’s income slab rate regardless of holding period. From FY 2025-26, this changed.

Finance (No.2) Act 2024 amended the Section 50AA definition to cover only funds investing more than 65% in debt and money market instruments. Gold ETFs and gold FoFs no longer meet that definition. They stepped out of the slab-rate penalty box.

Gold ETFs (listed on exchanges): Held under 12 months: STCG, taxed at your income slab rate. Held 12 months or more: LTCG, taxed at 12.5% on the full gain.

Gold mutual fund FoFs (unlisted structures): Held under 24 months: STCG, taxed at your income slab rate. Held 24 months or more: LTCG, taxed at 12.5% on the full gain.

One critical distinction from equity fund LTCG: the ₹1.25 lakh annual exemption does not apply to gold ETF or gold fund LTCG. That exemption is exclusively for equity-oriented funds under Section 112A. Gold fund LTCG falls under Section 112 and is taxable at 12.5% from the first rupee of gain.

Gold tax in India, for ETF holders in FY 2025-26, looks like this: a 30% bracket investor holding a gold ETF for 2 years and generating ₹5 lakh in gains pays 12.5% on the full ₹5 lakh, totalling ₹62,500. Under the old FY 2024-25 rules, the same investor would have paid 30% = ₹1.5 lakh. The shift from slab rate to LTCG is a meaningful improvement for long-term gold investors.

The comparison with Sovereign Gold Bonds deserves an important update from Budget 2026. Previously, SGBs held to maturity were completely exempt from capital gains tax.

Budget 2026 changed this: from 1 April 2026, the capital gains tax exemption on SGBs applies only to investors who purchased them directly from RBI during the initial issue (primary market). If you bought SGBs from the secondary market (stock exchange), your gains are now taxable at applicable LTCG rates.

💡 Know this: For long-term gold investors, the choice of vehicle now has real tax consequences. Gold ETFs held over 12 months attract 12.5% LTCG (no ₹1.25L exemption). Gold FoFs held over 24 months attract the same 12.5%. SGBs bought at the RBI primary issue and held to maturity remain completely tax-free. SGBs bought from the secondary market attract capital gains tax from April 2026. The right instrument depends entirely on where and how you buy, not just on the gold price.

SWP (Systematic Withdrawal Plan) Taxation: What Retirees Get Wrong

A Systematic Withdrawal Plan lets you redeem a fixed amount from your mutual fund at regular intervals, monthly or quarterly. It is popular with retirees who want a steady income stream from their corpus. Understanding SWP mutual fund taxation matters because every payout creates a tax liability.

Every SWP withdrawal is a redemption of mutual fund units. It is taxable as capital gains under the standard mutual fund taxation rules. The method used is FIFO (First In, First Out): the oldest units you hold are redeemed first when an SWP triggers.

Here is why that is good news for long-term SWP users. If you built a corpus over 10 years via SIP, your oldest units are 10 years old when you start SWP. Those units are long-term (held over 12 months) and generate LTCG.

The 12.5% LTCG rate applies only on gains above ₹1.25 lakh. For a typical retiree withdrawing ₹20,000 per month from a large corpus, the actual gain component of each withdrawal may be small enough to stay well within the annual LTCG exemption.

💡 Know this: Your ₹20,000 monthly SWP does not mean ₹20,000 in gains each month. Only a portion of each SWP payout is profit (the rest is return of your own invested capital). In a fund where your purchase price was ₹100, and the current NAV is ₹200, roughly half of each SWP payout is profit. Track the actual gain, not the withdrawal amount, to understand your real tax liability.

Mutual fund investments are subject to market risks. Past performance is not indicative of future results.

TDS on Mutual Funds: Section 194K Decoded

Section 194K governs TDS on mutual fund payouts. Most investors have heard of 194K TDS but are unclear about exactly when it affects their mutual fund tax liability.

When Does 194K TDS Apply?

If you hold the IDCW (Income Distribution cum Capital Withdrawal) option, formerly called the dividend option, the AMC deducts TDS at 10% when total IDCW payouts from a single fund scheme cross ₹10,000 in a financial year. The AMC deducts this before crediting the payout to your account.

This threshold was raised from ₹5,000 to ₹10,000 by the Finance Bill 2025, effective from 1 April 2025 (FY 2025-26). The rate of 10% remains unchanged.

This 194K TDS applies only to resident investors. The deduction shows up in your Form 26AS. If the TDS deducted is higher than your actual tax liability on that income (because you are in a lower slab), you can claim the excess as a refund when filing your ITR.

Growth Option vs IDCW Option: The Tax Difference

Growth option investors are not subject to 194K TDS. When you redeem growth option units, you owe capital gains tax, and you calculate and pay it yourself at the time of ITR filing. No TDS is deducted at source.

IDCW option investors receive regular payouts, but those payouts are taxed at their full income slab rate, not the favourable 12.5% LTCG rate. A 30% bracket investor receiving ₹20,000 in IDCW pays ₹6,000 in tax on it.

The same ₹20,000 received as LTCG from a growth option redemption would attract zero tax if within the ₹1.25 lakh annual exemption. Over the years, this difference compounds.

NRI TDS on Mutual Funds

For NRI investors, TDS rates are different and applied at source regardless of the investor’s actual tax liability. For equity MFs, STCG TDS is 20%, and LTCG TDS is 12.5%.

For IDCW (dividend) income from mutual fund units paid to NRIs, TDS under Section 196A is applied at 20% (or at the applicable DTAA rate, whichever is lower). NRIs do not get the ₹10,000 annual threshold exemption that resident investors enjoy under Section 194K. TDS on IDCW for NRIs is deducted from the first rupee.

NRIs can claim a refund by filing an Indian ITR if the TDS deducted exceeds actual liability, particularly when DTAA (Double Taxation Avoidance Agreement) benefits between India and their country of residence apply.

💡 Know this: For most long-term investors in the 15% to 30% tax slab, the growth option is the more tax-efficient choice. All the gains accumulate in the NAV, and you only trigger a tax event when you actually redeem. The IDCW option makes practical sense for retirees who need a regular income and are in a low tax bracket where the slab-rate taxation is not punishing.

Budget 2024: What Changed and Why It Still Matters

The Union Budget 2024, presented on 23 July 2024, changed equity mutual fund capital gains tax for the first time since 2018. Budget 2026 confirmed these mutual fund taxation rates continue unchanged.

Parameter	Before 23 July 2024	From 23 July 2024 (Current)
Equity MF STCG (under 12 months)	15%	20%
Equity MF LTCG (over 12 months)	10%	12.5%
Annual LTCG exemption (equity)	₹1 lakh	₹1.25 lakh
Debt MF LTCG and indexation	Already removed April 2023	Not applicable
Budget 2026 changes	N/A	None

Source: Union Budget 2024 (July 2024). Section 112A, Income Tax Act. Budget 2026 (February 2026).

The STCG increase from 15% to 20% hits active investors hardest. A ₹1 lakh short-term gain now costs ₹20,000 in mutual fund tax, up from ₹15,000 before Budget 2024. That is a 33% increase in tax on the same gain.

If you trade between funds frequently, this change materially reduces the after-tax advantage of switching to a better-performing fund.

For LTCG, the maths is more nuanced. On a ₹2 lakh long-term gain: pre-Budget 2024 tax was 10% on ₹1 lakh = ₹10,000. Post-Budget tax is 12.5% on ₹75,000 = ₹9,375.

The tax is actually marginally lower despite the higher rate, because the exemption has increased. For gains above ₹3-4 lakh, the higher rate starts to cost more than the higher exemption saves.

Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing. Past performance is not indicative of future results.

How to Reduce Your Mutual Fund Tax Bill Legally

Understanding the mutual fund tax rules and rates is the theory. Using them to your advantage is the practice. Two strategies that work and one that is often misunderstood.

Strategy 1: Use the ₹1.25 Lakh LTCG Exemption Actively (Not Passively)

Most investors let this exemption sit unused. That is a mistake. The ₹1.25 lakh exemption resets on 1 April every year.

If you have significant long-term gains building up in your portfolio, there are two ways to use this exemption actively.

Sub-approach A: Annual LTCG harvesting. This is the most underused tool in mutual fund tax planning. Even if you do not need the money, redeem up to ₹1.25 lakh of LTCG from an equity fund each year before 31 March, and immediately reinvest at the current NAV. This resets your cost basis to the higher current price and reduces the taxable gain you face when you eventually make a real redemption. For a ₹50 lakh corpus growing at 12% annually, doing this consistently over 10 years saves approximately ₹1.5 lakh in total tax compared to a single large exit at the end.

Sub-approach B: Split large redemptions across two financial years. If you need to redeem a large corpus (home purchase, education), check whether splitting it across 31 March and 1 April applies the ₹1.25 lakh exemption twice. A home down payment of ₹25 lakh, structured correctly, can save ₹15,000 to ₹30,000 in LTCG tax with one timing decision.

Both sub-approaches require the units to already qualify as long-term (held 12 months or more). Plan at least one year for this to work.

Strategy 2: Tax Loss Harvesting Before 31 March

Before the financial year ends, scan your portfolio for funds showing unrealised losses. This is one of the most effective mutual fund tax reduction strategies available. Redeeming them before 31 March crystallises the loss.

That loss offsets gains from other funds, reducing net taxable income.

Rules for set-off:

• Short-term capital losses can offset both STCG and LTCG.
• Long-term capital losses can only offset LTCG.
• Unused losses can be carried forward for up to 8 financial years, provided you file your ITR on time.

Reinvest immediately in the same fund or a similar one. There is no mandatory waiting period under Indian tax law before you re-enter the same fund.

💡 Know this: Does the investment method affect how you are taxed? SIP investors have a natural advantage during partial redemptions. Most fund houses apply FIFO (First In, First Out), meaning the oldest units are redeemed first. For a SIP running for 3 years, the earliest instalments are long-term already. During a partial redemption, these older long-term units are exited before the newer short-term ones, giving you LTCG treatment automatically on the first units sold.

Mutual Fund Taxation: New Tax Regime vs Old Tax Regime

This is the most common misconception in mutual fund taxation: many investors believe that choosing a tax regime changes their capital gains liability on funds.

Tax Aspect	New Regime (Default)	Old Regime (Opt-in)
Equity MF STCG rate	20%	20%
Equity MF LTCG rate	12.5% on gains above ₹1.25 lakh	12.5% on gains above ₹1.25 lakh
Debt MF tax	Applicable slab rate	Applicable slab rate
Gold MF / ETF tax	STCG at slab rate (under 12/24 months); LTCG at 12.5% (over 12/24 months)	STCG at slab rate (under 12/24 months); LTCG at 12.5% (over 12/24 months)
ELSS 80C deduction	Not available	Available (up to ₹1.5 lakh)
IDCW income tax	Applicable slab rate	Applicable slab rate
Section 87A rebate on LTCG	Does not apply	Does not apply

Capital gains tax rates are identical under both regimes. The only practical difference is the Section 80C deduction for ELSS, which is available exclusively under the old tax regime.

The new regime is the default for FY 2023-24. If you want the ELSS 80C benefit, explicitly opt into the old regime when filing your ITR.

How to Download Your Capital Gain Statement

Before filing your ITR, you need an accurate statement of all mutual fund gains and losses from the financial year. This is the document that translates mutual fund taxation theory into your actual tax liability. Two registrar platforms cover the majority of Indian fund houses.

CAMS: For Most Fund Houses

CAMS (Computer Age Management Services) handles registrar functions for the majority of major AMCs. Your CAMS capital gain statement is the primary document for calculating your mutual fund tax liability at ITR time.

1. Visit camsonline.com and go to the Investor Services section.
2. Select Statements and then Capital Gains Statement.
3. Enter your PAN and registered email address, and select the financial year.
4. Choose a summary (for quick ITR entry) or a detailed transaction-level statement.
5. The statement arrives in your email within minutes.

KFintech: For the Rest

KFintech (formerly Karvy) handles the registrar back-end for a different set of AMCs. If some of your funds do not appear in your CAMS statement, they are registered with KFintech. Follow the same process on their portal.

For a single document covering all fund houses across both registrars, use the NSDL CAS (Consolidated Account Statement) from nsdl.co.in. This gives you every mutual fund tax-relevant transaction in one file.

💡 Know this: Always download the detailed transaction-level statement, not the summary. The summary shows final numbers. The detailed version shows the holding period, acquisition price, and gain or loss for every individual redemption. For an SIP portfolio running across 5 to 7 years, this is hundreds of individual transactions. Your CA needs the detailed version to populate Schedule CG in your ITR correctly.

Conclusion

Mutual fund taxation in India rewards patience, timing, and basic planning. The rules are clear once you understand them, and the tax savings from applying them correctly are real. Three things to act on this week for your mutual fund tax strategy.

Equity funds held over 12 months get the 12.5% LTCG rate, and the first ₹1.25 lakh of gains every year is completely tax-free. Do not let that exemption expire unused each April. Redeeming up to ₹1.25 lakh of gains before 31 March and immediately reinvesting saves approximately ₹1.5 lakh in tax over a 10-year investing horizon.

Debt funds lost their tax advantage in April 2023. If you are in the 20% to 30% tax bracket and holding debt MFs for the indexation benefit that existed before 2023, that benefit is gone. Run a post-tax comparison against FDs and other alternatives before deciding to stay.

Remember the Section 87A trap. Even if your salary income is under ₹12 lakh and you expect zero tax under the new regime, equity MF LTCG is not covered by the rebate.

This is one aspect of mutual fund taxation that catches even experienced investors off guard. Calculate your gains separately.

Calculate your mutual fund tax liability using the 1% Club Tax Calculator to see the exact number for this financial year.

Planning fresh investments after understanding the full tax picture? Calculate how much your SIP can grow with our SIP calculator. Download the 1% Club app to invest and track your portfolio with the complete tax picture already in view.

This content is for educational purposes only and does not constitute investment advice. Please consult a SEBI-registered financial advisor before making investment decisions.

Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing. Past performance is not indicative of future results.

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