Profit from redeeming equity fund units held for more than 12 months — taxed at 12.5% with a ₹1.25 lakh annual exemption (Budget 2024 rates).
LTCG refers to gains from selling mutual fund units held beyond the qualifying long-term period. For equity-oriented funds (≥65% equity), units held for more than 12 months qualify as long-term. Tax rates are updated by the Union Budget — investors should verify current rates each assessment year.
Buy 100 units at NAV ₹50 (total ₹5,000). Hold 15 months. Sell at NAV ₹80 (total ₹8,000). Gain = ₹3,000. Since you held over 12 months, this is LTCG. The first ₹1.25 lakh of LTCG from equity funds per year is tax-free. Above that, you pay at the applicable LTCG rate.
Equity-oriented funds (≥65% equity): units held >12 months → LTCG. Tax at 12.5% on gains above ₹1.25 lakh/year (Budget 2024).
For SIPs, each monthly instalment has its own 12-month clock from its allotment date.
LTCG on equity funds does not benefit from indexation — the full nominal gain is taxed.
Debt funds (post Budget 2023): taxed at slab rates regardless of holding period. Verify current rules annually.
Purchase: 1,000 units at NAV ₹100 = ₹1,00,000 Sale after 18 months: NAV ₹130 → ₹1,30,000 Gain = ₹30,000 (LTCG, held >12 months) Exemption: ₹1,25,000/year → ₹30,000 < exemption → Tax = ₹0 If gain were ₹2,00,000: Taxable LTCG = ₹2,00,000 − ₹1,25,000 = ₹75,000 Tax at 12.5% = ₹9,375