How are mutual fund investments taxed in India?

How are mutual fund investments taxed in India?

Mutual fund investments in India are taxed differently depending on the type of fund and how long you hold your investment. Here’s a simplified overview:

Equity Mutual Funds

  • Sold within 1 year: Gains are taxed at 20% (applicable to redemptions made on or after July 23, 2024).
  • Sold after 1 year: Gains above ₹1.25 lakh in a financial year are taxed at 12.5%.

Debt Mutual Funds

  • For investments made on or after April 1, 2023, all capital gains are taxed as per your applicable income tax slab, no matter how long you hold the units.

Dividends

  • Dividends received from any mutual fund are added to your total taxable income and taxed according to your income slab.
  • There is no Dividend Distribution Tax (DDT) anymore—dividends are taxed directly in the hands of investors.

Note:
 Tax laws are subject to change. Before making investment decisions, always check the latest rules or consult a qualified tax advisor for guidance.

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