CAPITAL GAIN TAXATION IN MUTUAL FUNDS

Mutual Funds are divided in two most important categories:

1. Equity Funds: – Any mutual fund that invests more than 65 per cent of its asset in equity shares is called Equity Funds.
2. Debt Funds: – Any mutual fund that invests less than 65 per cent of its asset in equity is called Debt

Funds.

Capital Gain Taxation on Equity Funds & Debt Fund:  

A capital gain is profit received by an investor after selling the units of the mutual funds at a greater price than the purchase price. Profit can be earned by investor in Short Term Capital Gain (STCG) as well as in Long Term Capital Gain but the tax calculation is different in STCG & LTCG. The taxation rate of capital gains of mutual funds depends on the holding period and type of mutual fund. The holding period is the duration for which the mutual fund units were held by an investor.