Both Equity and Debt based mutual funds are imposed with tax at the time of redemption. Tax reductions on capital gains are also implied for ELSS and gold-based mutual fund schemes. Please read through the following article to gain a better understanding of this. 

For Equity-based mutual funds

  • If the units are sold after 1 year, you must pay a long-term capital gains tax of 10% over a return of 1 lakh in a financial year.
  • If the units are sold before a year, the capital gains are treated as short-term and are taxed at 15%. 

For Debt- based mutual funds 

  • If you decide to sell your Debt mutual funds before the period of 3 years, the gains are added to your income and the tax is applicable based on the tax slab you fall under. The higher the tax bracket, the higher the tax imposed on your debt mutual funds. 
  • If the funds are sold after a period of 3 years, it is treated as long-term capital gains and is taxed at 20% with indexation benefits. Indexation helps in the inflation of purchase costs and thus reduces the tax implications slightly. 

Tickertape provides a tax calculator that is highly beneficial in meeting your financial goals. Understanding the tax implications before starting your investment journey, gives a clear picture of the range of returns you might be gaining and helps in avoiding unnoticed pitfalls. 

For ELSS-based mutual funds

  • The minimum period of holding for all the ELSS tax-saving-based mutual funds is 3 years and any returns above 1 lakh are taxed at 10%. 

For Gold based mutual funds

  • If the investment period is less than 3 years, I.e if you decide to exit within 3 years of investing in a gold-based portfolio, gains are added to taxable income and taxed according to the individual's tax slab. 
  • If the investment period is over 3 years, returns are taxed at 20% with an indexation benefit. 

We have also added an option to calculate the tax implied based on the number of your investment tenure. This helps in identifying an approximate tax value on your capital gains.