{"id":42347,"date":"2026-08-18T14:30:00","date_gmt":"2026-08-18T09:00:00","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=42347"},"modified":"2026-08-16T22:48:42","modified_gmt":"2026-08-16T17:18:42","slug":"how-mutual-fund-taxes-are-calculated-step-by-step","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/","title":{"rendered":"How Mutual Fund Taxes Are Calculated Step by Step ?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_86 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/#step_1_identify_the_fund_type\" >step 1. identify the fund type<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/#step_2_determine_the_holding_period\" >step 2. determine the holding period.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/#step_3_calculate_the_capital_gain\" >step 3. calculate the capital gain<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/#step_4_apply_the_tax_rate\" >step 4. apply the tax rate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/#step_5_add_cess_and_surcharge\" >step 5. add cess and surcharge<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/#example_equity_fund_ltcg\" >example. equity fund ltcg.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/#example_short-term_equity_gain\" >example. short-term equity gain<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/#special_rules\" >special rules<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/#frequently_asked_questions\" >frequently asked questions.<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n<p class=\"wp-block-paragraph\">tax on mutual funds is not a single number. it depends on the type of fund, how long it was held, and when it was bought.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">the difference between a 9-month holding and an 18-month holding can be significant. the same profit gets taxed at different rates&nbsp;<a href=\"https:\/\/aliceblueonline.com\/blog\/how-mutual-funds-are-taxed-in-india-after-the-2024-budget-changes\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">here is how the calculation works.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"step_1_identify_the_fund_type\"><\/span><strong>step 1. identify the fund type<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">tax rules start with the fund category&nbsp;<a href=\"https:\/\/www.tatamutualfund.com\/blogs\/mutual-fund-taxation-india-capital-gains-dividends-indexation\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>equity-oriented funds.<\/strong>&nbsp;invest at least 65% in equity shares of domestic companies. large-cap, mid-cap, small-cap, elss, and aggressive hybrid funds fall here&nbsp;<a href=\"https:\/\/www.livemint.com\/money\/equity-vs-debt-mutual-fund-taxation-how-your-mf-gains-are-taxed-in-india-11779804069489.html#1\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/www.tatamutualfund.com\/blogs\/mutual-fund-taxation-india-capital-gains-dividends-indexation\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>debt and non-equity funds.<\/strong>&nbsp;invest less than 65% in equity. pure debt funds, conservative hybrids, gold funds, and international funds fall here&nbsp;<a href=\"https:\/\/www.livemint.com\/money\/equity-vs-debt-mutual-fund-taxation-how-your-mf-gains-are-taxed-in-india-11779804069489.html#1\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/www.tatamutualfund.com\/blogs\/mutual-fund-taxation-india-capital-gains-dividends-indexation\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>specified mutual funds.<\/strong>&nbsp;debt funds with more than 65% in debt and money market instruments, bought on or after april 1, 2023&nbsp;<a href=\"https:\/\/www.tatamutualfund.com\/blogs\/mutual-fund-taxation-india-capital-gains-dividends-indexation\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"step_2_determine_the_holding_period\"><\/span><strong>step 2. determine the holding period.<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">the holding period decides whether gains are short-term or long-term&nbsp;<a href=\"https:\/\/taxguru.in\/income-tax\/sold-shares-equity-mutual-funds-tax-liability.html#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>equity-oriented funds.<\/strong>&nbsp;held for 12 months or less = short-term. held for more than 12 months = long-term&nbsp;<a href=\"https:\/\/www.livemint.com\/money\/personal-finance\/ltcg-and-stcg-key-tax-rules-for-equity-shares-and-mutual-fund-investors-in-fy-202526-11784610220710.html?aiQuickSummary=true#1\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/www.tatamutualfund.com\/blogs\/tax-efficiency-125-advantage\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>debt and non-equity funds.<\/strong>&nbsp;held for 24 months or less = short-term. held for more than 24 months = long-term&nbsp;<a href=\"https:\/\/www.tatamutualfund.com\/blogs\/tax-efficiency-125-advantage\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/m.economictimes.com\/wealth\/tax\/latest-capital-gains-tax-rate-for-equity-gold-mutual-funds-for-fy2026-2027-after-budget-2026\/amp_articleshow\/127796728.cms#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>specified mutual funds (debt funds bought after april 1, 2023).<\/strong>&nbsp;all gains are short-term. holding period does not matter&nbsp;<a href=\"https:\/\/www.motilaloswal.com\/personal-finance\/capital-gains\/long-term-capital-gain-on-mutual-funds-tax-exemptions-and-calculations#1\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/www.tatamutualfund.com\/blogs\/mutual-fund-taxation-india-capital-gains-dividends-indexation\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"step_3_calculate_the_capital_gain\"><\/span><strong>step 3. calculate the capital gain<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">the gain is the difference between the sale price and the purchase price&nbsp;<a href=\"https:\/\/www.bajajfinserv.in\/investments\/how-to-calculate-capital-gains-tax#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>equity-oriented funds.<\/strong>&nbsp;purchase price is the cost of acquisition. sale price is the redemption value. exit loads are deducted from the sale price&nbsp;<a href=\"https:\/\/www.taxbuddy.com\/blog\/advance-tax-capital-gains-how-to-estimate-pay-tax-on-shares-mutual-funds\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>debt funds (pre-april 2023).<\/strong>&nbsp;purchase price is the cost of acquisition. sale price is the redemption value. the calculation is the same&nbsp;<a href=\"https:\/\/m.economictimes.com\/wealth\/tax\/latest-capital-gains-tax-rate-for-equity-gold-mutual-funds-for-fy2026-2027-after-budget-2026\/amp_articleshow\/127796728.cms#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>specified mutual funds (post-april 2023).<\/strong>&nbsp;same calculation. gains are taxed at slab rate regardless of holding period.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"step_4_apply_the_tax_rate\"><\/span><strong>step 4. apply the tax rate<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>equity-oriented funds.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">holding period<\/th><th class=\"has-text-align-left\" data-align=\"left\">tax rate<\/th><\/tr><\/thead><tbody><tr><td>12 months or less (stcg)<\/td><td>20%<\/td><\/tr><tr><td>more than 12 months (ltcg)<\/td><td>12.5% on gains above \u20b91.25 lakh<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">the first \u20b91.25 lakh of ltcg in a financial year is tax-free&nbsp;<a href=\"https:\/\/www.motilaloswal.com\/personal-finance\/capital-gains\/long-term-capital-gain-on-mutual-funds-tax-exemptions-and-calculations#1\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/www.livemint.com\/money\/personal-finance\/ltcg-and-stcg-key-tax-rules-for-equity-shares-and-mutual-fund-investors-in-fy-202526-11784610220710.html?aiQuickSummary=true#1\" target=\"_blank\" rel=\"noopener\"><\/a>. this limit applies to all equity investments combined, not per fund&nbsp;<a href=\"https:\/\/www.motilaloswal.com\/personal-finance\/capital-gains\/long-term-capital-gain-on-mutual-funds-tax-exemptions-and-calculations#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>debt and non-equity funds (bought before april 1, 2023).<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">holding period<\/th><th class=\"has-text-align-left\" data-align=\"left\">tax rate<\/th><\/tr><\/thead><tbody><tr><td>24 months or less (stcg)<\/td><td>slab rate<\/td><\/tr><tr><td>more than 24 months (ltcg)<\/td><td>12.5%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>specified mutual funds (debt funds bought on or after april 1, 2023).<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">holding period<\/th><th class=\"has-text-align-left\" data-align=\"left\">tax rate<\/th><\/tr><\/thead><tbody><tr><td>any period<\/td><td>slab rate<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">no indexation. no special rate. no exemption limit&nbsp;<a href=\"https:\/\/www.motilaloswal.com\/personal-finance\/capital-gains\/long-term-capital-gain-on-mutual-funds-tax-exemptions-and-calculations#1\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/m.economictimes.com\/wealth\/tax\/latest-capital-gains-tax-rate-for-equity-gold-mutual-funds-for-fy2026-2027-after-budget-2026\/amp_articleshow\/127796728.cms#1\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/www.tatamutualfund.com\/blogs\/mutual-fund-taxation-india-capital-gains-dividends-indexation\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"step_5_add_cess_and_surcharge\"><\/span><strong>step 5. add cess and surcharge<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">health and education cess of 4% applies on the tax amount. surcharge may apply if total income exceeds specified limits. the rates above are base rates. add cess on top to get the effective rate&nbsp;<a href=\"https:\/\/aliceblueonline.com\/blog\/how-mutual-funds-are-taxed-in-india-after-the-2024-budget-changes\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"example_equity_fund_ltcg\"><\/span><strong>example. equity fund ltcg.<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">\u20b95,00,000 invested in an equity fund in 2022. redeemed for \u20b97,50,000 in 2026. holding period is more than 12 months&nbsp;<a href=\"https:\/\/www.motilaloswal.com\/personal-finance\/capital-gains\/long-term-capital-gain-on-mutual-funds-tax-exemptions-and-calculations#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">gain = \u20b92,50,000.<br>exemption = \u20b91,25,000.<br>taxable gain = \u20b91,25,000.<br>tax = \u20b91,25,000 \u00d7 12.5% = \u20b915,625.<br>cess = \u20b9625.<br>total tax = \u20b916,250&nbsp;<a href=\"https:\/\/www.motilaloswal.com\/personal-finance\/capital-gains\/long-term-capital-gain-on-mutual-funds-tax-exemptions-and-calculations#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"example_short-term_equity_gain\"><\/span>example. short-term equity gain<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">\u20b95,00,000 invested in an equity fund. redeemed for \u20b96,20,000 after 9 months&nbsp;<a href=\"https:\/\/aliceblueonline.com\/blog\/how-mutual-funds-are-taxed-in-india-after-the-2024-budget-changes\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">gain = \u20b91,20,000.<br>holding period = less than 12 months.<br>tax at 20% = \u20b924,000.<br>cess = \u20b9960.<br>total tax = \u20b924,960&nbsp;<a href=\"https:\/\/aliceblueonline.com\/blog\/how-mutual-funds-are-taxed-in-india-after-the-2024-budget-changes\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">by waiting 9 more months, the same investor saved \u20b921,710 in tax&nbsp;<a href=\"https:\/\/aliceblueonline.com\/blog\/how-mutual-funds-are-taxed-in-india-after-the-2024-budget-changes\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"special_rules\"><\/span><strong>special rules<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>sip investments.<\/strong>&nbsp;each instalment has its own holding period. fifo method is used for redemptions. the earliest units are redeemed first&nbsp;<a href=\"https:\/\/www.livemint.com\/money\/personal-finance\/ltcg-and-stcg-key-tax-rules-for-equity-shares-and-mutual-fund-investors-in-fy-202526-11784610220710.html?aiQuickSummary=true#1\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/taxguru.in\/income-tax\/sold-shares-equity-mutual-funds-tax-liability.html#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>dividends.<\/strong>&nbsp;dividends from mutual funds are added to income. taxed at slab rate. tds at 10% if dividend exceeds \u20b910,000 from a single payer&nbsp;<a href=\"https:\/\/www.livemint.com\/money\/equity-vs-debt-mutual-fund-taxation-how-your-mf-gains-are-taxed-in-india-11779804069489.html#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>elss.<\/strong>&nbsp;three-year lock-in. all redemptions are ltcg. tax at 12.5% on gains above \u20b91.25 lakh. section 80c deduction up to \u20b91.5 lakh is available&nbsp;<a href=\"https:\/\/aliceblueonline.com\/blog\/how-mutual-funds-are-taxed-in-india-after-the-2024-budget-changes\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/taxguru.in\/income-tax\/tax-implications-investing-fds-mfs-pms-aifs.html#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"frequently_asked_questions\"><\/span><strong>frequently asked questions.<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>1. what is the ltcg rate on equity mutual funds in 2026?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">12.5% on gains above \u20b91.25 lakh in a financial year. gains within the limit are tax-free&nbsp;<a href=\"https:\/\/www.livemint.com\/money\/personal-finance\/ltcg-and-stcg-key-tax-rules-for-equity-shares-and-mutual-fund-investors-in-fy-202526-11784610220710.html?aiQuickSummary=true#1\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/www.tatamutualfund.com\/blogs\/tax-efficiency-125-advantage\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>2. are debt funds taxed at slab rate?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">debt funds bought on or after april 1, 2023 are taxed at slab rate. pre-april 2023 funds get 12.5% ltcg if held over 24 months&nbsp;<a href=\"https:\/\/www.motilaloswal.com\/personal-finance\/capital-gains\/long-term-capital-gain-on-mutual-funds-tax-exemptions-and-calculations#1\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/m.economictimes.com\/wealth\/tax\/latest-capital-gains-tax-rate-for-equity-gold-mutual-funds-for-fy2026-2027-after-budget-2026\/amp_articleshow\/127796728.cms#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>3. how are sips taxed?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">each instalment has its own holding period. fifo method is used for redemptions&nbsp;<a href=\"https:\/\/www.livemint.com\/money\/personal-finance\/ltcg-and-stcg-key-tax-rules-for-equity-shares-and-mutual-fund-investors-in-fy-202526-11784610220710.html?aiQuickSummary=true#1\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/taxguru.in\/income-tax\/sold-shares-equity-mutual-funds-tax-liability.html#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>4. what is the \u20b91.25 lakh exemption limit?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">it is the annual ltcg exemption for all equity investments combined. not per fund&nbsp;<a href=\"https:\/\/www.motilaloswal.com\/personal-finance\/capital-gains\/long-term-capital-gain-on-mutual-funds-tax-exemptions-and-calculations#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>5. is indexation available for debt funds?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">no. indexation is not available for any debt fund redemption on or after july 23, 2024&nbsp;<a href=\"https:\/\/www.tatamutualfund.com\/blogs\/tax-efficiency-125-advantage\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/m.economictimes.com\/wealth\/tax\/latest-capital-gains-tax-rate-for-equity-gold-mutual-funds-for-fy2026-2027-after-budget-2026\/amp_articleshow\/127796728.cms#1\" target=\"_blank\" rel=\"noopener\"><\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>tax on mutual funds is not a single number. it depends on the type of fund, how long it was held, and when it was bought. the difference between a 9-month holding and an 18-month holding can be significant. the same profit gets taxed at different rates&nbsp;. here is how the calculation works. step 1. [&#8230;]<\/p>\n<p><a class=\"btn btn-secondary understrap-read-more-link\" href=\"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/\">Read More&#8230;<\/a><\/p>\n","protected":false},"author":41,"featured_media":41746,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[130,236],"tags":[],"class_list":["post-42347","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mutual-fund-taxation","category-tax"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How Mutual Fund Taxes Are Calculated Step by Step ? - Kuvera<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/kuvera.in\/blog\/how-mutual-fund-taxes-are-calculated-step-by-step\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Mutual Fund Taxes Are Calculated Step by Step ? - Kuvera\" \/>\n<meta property=\"og:description\" content=\"tax on mutual funds is not a single number. it depends on the type of fund, how long it was held, and when it was bought. the difference between a 9-month holding and an 18-month holding can be significant. the same profit gets taxed at different rates&nbsp;. here is how the calculation works. step 1. 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