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How are gains from equity and debt mutual funds taxed if sold during the current financial year, 2024-25? - Iranna Karemani
The full Union Budget, presented on July 23, 2024, introduced two key changes regarding the taxation of mutual funds.
1. Higher capital gains tax rates on equity mutual funds.
2. Removal of indexation benefits.
These changes impact how gains on mutual funds are taxed, depending on when the units were purchased and sold.
Taxation on equity mutual funds
| When you sell | Holding period | Tax rate |
|---|---|---|
| On or after July 23, 2024 | One year or less | 20.0% |
| On or after July 23, 2024 | More than one year | 12.5% |
| Before July 23, 2024 | One year or less | 15.0% |
| Before July 23, 2024 | More than one year | 10.0% |
Long-term capital gains (LTCG) from equities - gains from investments held for more than a year - are exempt up to Rs 1.25 lakh in a financial year.
Taxation on debt mutual funds
| When you bought the fund | When you sell | Holding period | Tax rate |
|---|---|---|---|
| On or after April 1, 2023 | Any time | Any duration | Taxed as per your income slab |
| Before April 1, 2023 | Before July 23, 2024 | More than three years | 20% (with indexation benefit) |
| Before April 1, 2023 | Before July 23, 2024 | Three years or less | Taxed as per income slab |
| Before April 1, 2023 | On or after July 23, 2024 | More than two years | 12.5% |
| Before April 1, 2023 | On or after July 23, 2024 | Two years or less | Taxed as per income slab |
Also read: How are inherited mutual funds taxed?
This article was originally published on March 25, 2025.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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