Updated with July 2024 Budget tax reforms. Calculate exact Long-Term (LTCG @ 12.5%) and Short-Term (STCG @ 20%) capital gains tax on equity and debt mutual funds in India.
Equity LTCG (>12 months) = 12.5% × (Total Capital Gain − ₹1,25,000 Annual Exemption) + 4% Cess. Equity STCG (≤12 months) = 20% × Total Capital Gain + 4% Cess.
Tax_{LTCG} = 1.04 \times 0.125 \times \max(0, Gain - 1,25,000)Purchase Amount: ₹3,00,000 | Sale Value: ₹5,50,000 | Holding: 24 Months (Equity LTCG)
Effective July 23, 2024, the Indian Finance Ministry revised capital gains tax provisions for domestic equity and mutual funds. Long-Term Capital Gains (LTCG) on equity mutual funds held for more than 12 months are now taxed at 12.5% (increased from 10%), while the annual tax-free exemption threshold was increased from ₹1,00,000 to ₹1,25,000 per financial year.
Short-Term Capital Gains (STCG) on equity mutual funds redeemed within 12 months are now taxed at 20% flat (increased from 15%) plus 4% mandatory cess.
Under Section 112A of the Income Tax Act, combined Long-Term Capital Gains (LTCG) from equity mutual funds and listed shares up to ₹1,25,000 per financial year are completely tax-exempt.
Debt mutual funds purchased on or after April 1, 2023 no longer enjoy indexation benefits and are taxed at the investor’s marginal income tax slab rate as Short-Term Capital Gains.