A capital gain is the profit you make when you redeem an investment for more than it cost you. Whether that profit is a short-term capital gain (STCG) or a long-term capital gain (LTCG) depends on how long you held the units, and the holding period that applies depends on what the fund holds. For redemptions made on or after 23 July 2024, gains on equity funds are taxed at 20% short-term and 12.5% long-term on gains above ₹1.25 lakh in a financial year, in both cases without indexation.
How long do I have to hold before a gain becomes long term?
There is no single 12-month rule. The threshold changes with the type of fund:
| Tax bucket | Long-term after | Notes |
|---|---|---|
| Equity | 12 months | Equity-oriented schemes. |
| Specified MF (Debt) | 24 months | Units bought on or after 1 April 2023 are treated as short-term however long you hold them. |
| Gold/Silver | 24 months | Units bought between 1 April 2023 and 31 March 2025 are treated as short-term however long you hold them. |
| Other | 24 months | Everything that does not fall in the three buckets above. |
Anything held past the threshold for its bucket is a long-term capital gain. Anything sold before it is a short-term capital gain.
How are gains on equity funds taxed?
For equity-oriented schemes redeemed on or after 23 July 2024:
- Short-term (held 12 months or less) — taxed at 20%.
- Long-term (held more than 12 months) — the first ₹1.25 lakh of long-term gains in a financial year is exempt, and the excess is taxed at 12.5%, with no indexation benefit.
The ₹1.25 lakh exemption is an annual allowance across your equity long-term gains for the year, not a per-scheme or per-redemption limit.
How are gains on debt and other non-equity funds taxed?
This turns on when you bought the units, not only on how long you held them.
- Units of a specified mutual fund bought on or after 1 April 2023 are treated as short-term no matter how long you hold them, and the gain is added to your income and taxed at your applicable income tax slab rate.
- Units bought before 1 April 2023 still follow the holding-period rule. Held for more than 24 months, the gain is long-term and taxed at 12.5% without indexation for redemptions on or after 23 July 2024. Held for 24 months or less, it is short-term and taxed at your slab rate.
So "debt funds are always taxed at slab rates" is no longer true as a blanket statement — it holds for units acquired on or after 1 April 2023, while older units can still qualify for long-term treatment.
Is indexation still available?
No. For transfers made on or after 23 July 2024, long-term capital gains are computed without indexation. The earlier 20%-with-indexation route for non-equity funds no longer applies, and equity long-term gains never had indexation.
What else is added on top of the tax?
The rates above are base rates. Surcharge, where it applies to you, and Health and Education Cess at 4% on the aggregate of base tax and surcharge are charged over and above them. Your final liability also depends on your total income and the tax regime you have opted for, so treat these rates as the starting point rather than the whole calculation.
Where do I see my own capital gains?
Rupeezy works this out for you. Your mutual fund gains, split by bucket and by short-term versus long-term, are in the mutual fund capital gains report, which applies the holding-period, grandfathering and cut-off rules to each lot. For your stock and derivatives gains, see how to download tax P&L reports.
These reports are statements to file from, not tax advice. For your own position, take a tax professional's advice.