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: hold to the full 8-year maturity and the capital gain is completely exempt. Exit earlier, the year-5 window, or a sale on the exchange, and ordinary capital gains rules apply. 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

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 held to its 8-year maturity stays exempt.