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Stock Market · Markets & Taxation

Mutual fund tax

Budget 2024 changed mutual fund taxation significantly. The old rules (indexation for debt funds, 20% LTCG) are gone for most categories.

Equity mutual funds (holding > 65% equity)

• STCG (< 1 year): 20% (was 15%)
• LTCG (> 1 year): 12.5% on gains above ₹1.25 lakh (was 10%)
• Same as direct equity from Budget 2024

Debt mutual funds (post-April 2023 investments)

This is the big change. From April 2023, debt fund gains are taxed at your SLAB RATE regardless of holding period. No LTCG benefit. No indexation.

The entire debt fund advantage for high-income investors is gone. A 30% taxpayer pays 30% on debt fund gains whether held 1 year or 10 years.

Hybrid funds

• > 65% equity: treated as equity fund
• < 65% equity: treated as debt fund

Gold ETFs

Briefly swept into the debt-fund treatment in 2023, then handed a holding-period benefit back in 2024. Past 12 months: 12.5%, no indexation. Inside 12 months: slab rate.

Gold and international fund-of-funds

Same 12.5% rate, but these units aren't listed, so the long-term clock runs 24 months instead of 12.

Sovereign Gold Bonds (SGBs)

Special rule, narrowed from 1 April 2026: the capital gain is completely exempt only if you bought at the original issue and held to the full 8-year maturity. Bought on the exchange, or out early through the year-5 window or a sale, and ordinary capital gains rules apply: 12.5% past a year, slab rate inside it. The 2.5% interest is taxable at slab either way.

Equity MFSTCG 20%, LTCG 12.5% (same as stocks)

Debt MFslab rate (no LTCG benefit since the April 2023 change)

SGB held to maturitytax-free only if bought at the original issue. Bought on the exchange: taxed since April 2026

Takeaway. The April 2023 change put debt funds on slab rate regardless of holding period; Budget 2024 reset the rates and holding periods for everything else. Equity MF now follows the same rules as stocks, gold ETFs get 12.5% past a year, and an SGB stays exempt at maturity only if it was bought at the original issue.