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Categorization of Short term and Long Term Asset:

Type Termed as Short–Term If Holding period is: Termed as Long-term if Holding period is :
Equity funds (Note-1) Less than 12 months 12 months and more
Debt funds (Note-2) If less than 36 months More than 36 months
Hybrid equity-oriented funds If less than 12 months 12 months and more
Hybrid debt-oriented funds Less than 36 months 36 months and more
Equity Shares (Listed) Less than 12 months 12 months and more
Equity Shares (Unlisted) If less than 24 months More than 24 months

Note-

  • Equity funds are those mutual funds whose portfolio’s equity exposure exceeds 65%
  • Debt funds are those mutual funds whose portfolio’s debt exposure is in excess of 65%.

 Taxation Rates:

Fund type Short-term capital gains Long-term capital gains
Equity funds 15% Up to Rs 1 lakh – Nil Above Rs 1 lakh – 10%
Debt funds Taxed at the investor’s income tax slab rate 20% with Indexation
Hybrid equity-oriented funds 15% Up to Rs 1 lakh – Nil Above Rs 1 lakh – 10%
Hybrid debt-oriented funds Taxed at the investor’s income tax slab rate 20% with Indexation
Equity Shares (Listed) 15% Up to Rs 1 lakh – Nil Above Rs 1 lakh – 10%
Equity Shares (Unlisted) Taxed at the investor’s income tax slab rate 20% after Indexation (Resident)

10% without Indexation (Non Resident)

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Anubhav has over 5 years of professional experience in handling Audit & Assurance of various entities, Direct & Indirect Tax Advisory services, Project financing, Litigation Services, RERA, Preparation and Finalization of Income Tax returns, Monthly Compliance which includes GST, TDS and oth View Full Profile

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2 Comments

  1. Ashok Bangia says:

    Query on Mutual Funds redemption and annual Income –
    I Invested 25 L in MFs in 2015-16. Now I wish to redeem them- The value now is about 50 L !
    So the profit is 25 L
    I understand I have to pay Cap Gains tax at 10% of profit of 25L so Cap Gains will be 2.5L.
    Balance profit after CG is paid remains 22.5 L

    2 Qs –
    (a) After payment of 2.5 L Cap gains I transfer the redeemed amount 22.5L into my Savings Bank account, so no new investment was done .
    How is this 22.5 L amount treated- ie Do I have to show this Rs 22.5 lac in my annual income for the year FY 23-24!
    (b) I am worried if my annual income is over 1 cr- will my tax liability be over 30 % if I add all MFs redemption amounts and other earnings for the year

    (c)When do I have to pay the Cap Gains tax- ie immediately on redemption or during the end of financial year 2023-24 ie 31 July 2024
    Thanks and regards!

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