Mutual Funds & ETFs

How are equity mutual funds taxed in India?

Equity mutual funds in India are taxed based on how long you hold the units. Gains on units held under one year are short-term and taxed at 20 percent, while gains on units held over one year are long-term, with an annual exemption of Rs 1.25 lakh and the remainder taxed at 12.5 percent. For example, a Rs 2 lakh long-term gain has Rs 1.25 lakh exempt, and the balance Rs 75,000 is taxed at 12.5 percent. Tax rates and thresholds are revised periodically, so confirm the current figures before you plan a redemption.

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