New Income Tax Act effective 1st April 2026. Simplified Slabs introduced in New Regime.
Equity LTCG remains at 12.5% with ₹1.25L exemption.
How are Mutual Funds Taxed?
Taxation depends on three key factors:
- Fund Type: Equity, Debt (Specified), or Hybrid (Other).
- Holding Period: Short Term vs Long Term.
- Date of Transfer: Logic for FY 2026-27 and historical rules applied.
1. Equity Mutual Funds
Funds investing ≥ 65% in domestic equity shares.
| Holding Period | Transfer Date | Tax Rate |
|---|---|---|
| Less than 12 Months (STCG) | Before 23 July 2024 | 15% + Cess |
| On/After 23 July 2024 | 20% + Cess | |
| More than 12 Months (LTCG) | Before 23 July 2024 | 10% (> ₹1L) |
| On/After 23 July 2024 | 12.5% (> ₹1.25L) |
*LTCG Exemption limit increased to ₹1.25 Lakh/year (aggregate) for transfers post 23 July 2024.
2. Specified Mutual Funds (Debt/Gold/Intl)
Funds investing ≤ 35% in domestic equity shares (Section 50AA).
Includes: Debt Funds, Liquid Funds, Gold ETFs, and International Funds.
Case A: Invested On/After April 1, 2023 (Section 50AA)
| Tax Category | Deemed Short Term (Always) |
| Tax Rate | Slab Rate + Cess |
Case B: Invested Before April 1, 2023 (Old Regime)
| Holding Period | Tax Category | Tax Rate |
|---|---|---|
| Less than 36 Months | Short Term | Slab Rate |
| More than 36 Months | Long Term | 20% with Indexation |
3. Other / Hybrid Funds
Funds with equity exposure between 35% and 65%.
Often includes Balanced Hybrid Funds or Multi-Asset Funds.
| Holding Period | Tax Rate |
|---|---|
| Short Term | Slab Rate |
| Long Term (> 24 Months*) | 12.5% (No Indexation) |
*24 Months for unlisted units (most open-ended funds). 12 Months for listed units (ETFs).
4. Dividend Distributions (IDCW)
Dividends received from Mutual Funds are taxable in the hands of the investor.
| Category | Tax Rate | TDS Rate |
|---|---|---|
| Resident Individual | Slab Rate | 10% (if dividend > ₹10,000/year) |
| NRI | Slab Rate | 20% (plus surcharge & cess) |
5. Income Tax Slabs (FY 2026-27)
Tax on Debt funds, IDCW, and STCG on Hybrid/Debt funds is based on your total income slabs.
New Regime (FY 2026-27)
| Income Range | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 - ₹8,00,000 | 5% |
| ₹8,00,001 - ₹12,00,000 | 10% |
| ₹12,00,001 - ₹16,00,000 | 15% |
| ₹16,00,001 - ₹20,00,000 | 20% |
| ₹20,00,001 - ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Old Regime
| Income Range | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 - ₹5,00,000 | 5% |
| ₹5,00,001 - ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
*Standard Deduction of ₹75,000 is available for salaried employees in the New Regime (FY 2026-27). Rebate u/s 87A: No tax for income up to ₹12 Lakh.
5. TDS on Capital Gains
| Investor Status | TDS on STCG | TDS on LTCG |
|---|---|---|
| Resident | NIL | NIL |
| NRI | 15% / 20% / Slab (as per fund) | 10% / 12.5% (as per fund) |
*TDS rates for NRIs are subject to applicable Surcharge and Cess (effective rate is higher).
🧮 Mutual Fund Tax Calculator
Estimate your tax liability and TDS (for NRIs) based on FY 2026-27 rules.
Tax laws are subject to change. Please consult a qualified CA or tax advisor for personal filings.