Tax on Mutual Funds in India
And How EzyMoneyDeals Helps You Save More
- Types of Mutual Funds & How They’re Taxed
| Fund Type | Holding Period | Short-Term Tax (STCG) | Long-Term Tax (LTCG) |
| Equity Funds | Short Term: < 1 year Long Term: ≥ 1 year |
20% on gains | 12.5% on gains > ₹1.25 lakh/year |
| Debt Funds | Short Term: < 3 years Long Term: ≥ 3 years |
Taxed as per your income slab | 20% with indexation benefits (if applicable) |
| Hybrid Funds | Depends on equity allocation (>65% = equity taxation) | Varies | Varies |
- Detailed Tax Rules
Equity Mutual Funds
- If held for < 1 year → STCG @20%
- If held for ≥ 1 year → LTCG @12.5% (only if gains exceed ₹1.25 lakh in a financial year)
Debt Mutual Funds
- If held for < 3 years → STCG, taxed as per your income slab
- If held for ≥ 3 years → Earlier taxed @20% with indexation, but from April 2023, indexation benefit has been removed for most new investments.
ELSS (Tax Saving Mutual Funds)
- Comes with a 3-year lock-in
- Treated as equity fund → LTCG @10% after 1 year (after lock-in)
- Eligible for Section 80C deduction up to ₹1.5 lakh/year
TDS on Mutual Fund Gains (New Rule)
From April 1, 2020, TDS is NOT deducted on mutual fund capital gains. However:
- If you redeem and gain more than ₹1 lakh in a financial year (equity), you must declare and pay tax while filing ITR.
How EzyMoneyDeals Helps with Mutual Fund Taxes
| Feature | What It Does |
| Tax Summary Dashboard | View total gains (STCG, LTCG) at a glance |
| 80C Tracker | Monitors your ELSS investments and tax-saving status |
| Capital Gains Report | Download ready-to-use reports for ITR filing |
| Tax Alerts | Get notified when your gains cross taxable thresholds |
| Tax-Optimized Fund Suggestions | Helps you pick funds that align with your tax strategy |
| Tax Expert Assistance | Get help from advisors for ITR or tax planning on redemptions |
Smart Tax Tips with Mutual Funds (via EzyMoneyDeals)
- Use ELSS funds for tax deduction under Section 80C
- Hold equity funds for >1 year to reduce tax liability
- Plan redemptions smartly across financial years to stay under ₹1L LTCG limit
- Use STP to avoid lump sum tax shock
- Reinvest matured ELSS or debt fund profits tax-efficiently
Example: Equity Mutual Fund Tax
- Invested ₹2 lakhs in Jan 2022
- Redeemed ₹3.2 lakhs in Feb 2024
- Gain: ₹1.2 lakhs
- LTCG: ₹1.2L – ₹1L exemption = ₹20,000
- Tax: 10% of ₹20,000 = ₹2,000
Easily track all of this using EzyMoneyDeals’ capital gains calculator.
Final Thought:
Mutual Funds are tax-efficient — if you know the rules and use the right tools.
With EzyMoneyDeals, you not only grow your wealth, but you also keep more of it by managing taxes smartly.
