06/09/2022
How Mutual Funds are taxed?
We'll look at how equity mutual funds are taxed in this post.
When you sell any investment, including mutual funds, the profit that you make is called a capital gain.
So, if you invested Rs 1 lakh in an equity mutual fund and sold it for Rs 1.5 lakhs, the capital gain is Rs 50,000
Long-term capital gains (LTCG) and short-term capital gains (STCG) are the two forms of capital gains under current Mutual Fund taxation rules
If your capital gains exceed 1 lakh in a financial year and you've held for more than 12 months, you'll have to pay 10% tax under LTCG
Date of Investment: 1st Jan 2020
Investment amount: Rs 50,000
Date of Withdrawal: 1st Apr 2021
Withdrawal Value: Rs 1.75 lakhs
Capital Gains: Rs 1.25 lakhs
Taxes (10% @25,000): Rs 2500
Under STCG, you have to pay 15% tax on the capital gains if you sell your investment in equity mutual funds within 12 months
Date of Investment: 1st Jan 2020
Investment amount: Rs 50,000
Date of Withdrawal: 1st Dec 2020
Withdrawal Value: Rs 80,000
Capital Gains: Rs 30,000
Taxes (15% 30,000): Rs 4500
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