NS Tax & Financial Services
Tax on Equity Oriented MF
📊 Equity-Oriented Fund Tax Rules
✅ Short-Term Capital Gains (STCG)
Holding period: 12 months or less
Tax rate: 20% on profits
✅ Long-Term Capital Gains (LTCG)
Holding period: More than 12 months
Exemption limit: ₹1.25 lakh per financial year is tax-free
Tax rate: 12.5% on gains above ₹1.25 lakh
💡 Dividends (IDCW)
Tax treatment: Added to your income and taxed at your applicable slab rate
TDS: 10% TDS applies if total dividends exceed ₹5,000 in a year
An equity-oriented mutual fund is a scheme that invests more than 65% of its total proceeds into the equity shares of domestic companies.
For transfers on or after 23 July 2024, STCG covered by Section 111A is generally taxed at 20%, plus applicable surcharge and health & education cess, provided the applicable STT condition is satisfied.
LTCG covered by Section 112A is taxed at 12.5% on the portion exceeding ₹1.25 lakh of aggregate eligible LTCG in the financial year, plus applicable surcharge and health & education cess, provided the applicable STT condition is satisfied.Â
No. For transfers on or after 23 July 2024, the LTCG rate is 12.5% and indexation is not available.
No. Eligible LTCG from equity shares, equity-oriented mutual funds and specified business-trust units is considered for the Section 112A threshold.
The tax rates are the same, but each SIP instalment has its own purchase date and cost.
Therefore, each SIP instalment must be considered separately for determining whether the redeemed units are short-term or long-term.
The units are generally considered using the FIFO (First-In, First-Out) principle for determining which units are redeemed.
For example, if you invested monthly for 24 months, the oldest eligible units are considered first when units are redeemed.
