Glide Invest FAQ: What are the applicable taxes on Mutual Funds?

What are the applicable taxes on Mutual Funds?

Equity mutual funds are those funds that invest 65% or more in equity shares of listed Indian companies.
All other funds are categorised as Non-equity mutual funds and include debt funds, gold funds, fund of funds and international funds.

Taxation for both equity, hybrid and debt mutual funds are calculated differently.

Equity funds and Hybrid Funds are taxed as follows:
  1. Long-term capital gains (where holding period >= 12 months) are taxed at 10% (+ 4% cess = 10.40%) if your profit is above Rs.1L in the financial year.
  2. Short-term capital gains (where holding period < 12 months) are taxed at 15% (+ 4% cess = 15.60%)
Debt funds and other Non-Equity funds are taxed as follows:
  1. Long-term capital gains (where holding period >= 36 months) are taxed at a flat rate of 20% (+ 4% cess = 20.8%) after indexation.
  2. Short-term capital gains (where holding period < 36 months) are added to your taxable income and taxed at your income tax slab rate.
International Mutual Funds: All mutual funds not holding a minimum of 65% of Indian stocks or Indian stock-based ETFs are considered as “Non-Equity” mutual funds by the income tax department, and are taxed like all other Non-Equity funds.

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