Do I need to pay tax on equity fund gains?

The answer depends on the holding period and your annual income. Let's tackle the holding period first. If you have held the equity-oriented fund for less than 12 months, you must pay a 15 per cent tax (short-term capital gains tax). If you have held the fund for over a year, you don't have to pay any tax unless your gains are over Rs 1 lakh. In that case, you will need to consider your annual income, so we have listed five scenarios to explain how you will be taxed under the new regime. Scenario 1 Regular income: Nil Gains made from equity mutual funds: Rs 2.5 lakh In this case, you pay ZERO tax. Why? Because under the new tax regime, any income (including gains from mutual funds) under Rs 3 lakh is not taxable. Scenario 2 (For those whose income other than mutual fund gains is below Rs 3 lakh in the new tax regime) Annual income: Rs 2 lakh Gains made from equity mutual funds: Rs 2.5 lakh But let's make it Rs 1.5 lakh (Remember, Rs 1 lakh gains made on mutual funds are exempt from tax) Before we calculate the total annual income, let's first inform you that income up to Rs 3 lakh attracts zero tax in the new regime. (So, a person earning Rs 25,000 per month and below h

This article was originally published on June 16, 2023.