Taxation on capital gains depends on the time for which you stay invested in them, which is known as holding period of mutual funds. Below table gives a specific classification of short-term and long-term
Holding Period
Short-term
Long-term
Equity & Balanced Fund
Less than 12 months
12 months & more
Debt Fund
Less than 36 months
36 months & more
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For example, if you opt to redeem your Equity funds after 2 years, then the tax-rate applicable to your long-term capital gain amount would be 10% after deducting 1 lakh. So, if your gain is 1.2 lakhs then 10% will be taxed on Rs. 20000 as 1 lakh is exempted and so no tax to be paid for 1 lakh rupees.
Taxation on capital gains depends on the time for which you stay invested in them, which is known as holding period of mutual funds. Below table gives a specific classification of short-term and long-term
Holding Period
Short-term
Long-term
Equity & Balanced Fund
Less than 12 months
12 months & more
Debt Fund
Less than 36 months
36 months & more
For example, if you opt to redeem your Equity funds after 2 years, then the tax-rate applicable to your long-term capital gain amount would be 10% after deducting 1 lakh. So, if your gain is 1.2 lakhs then 10% will be taxed on Rs. 20000 as 1 lakh is exempted and so no tax to be paid for 1 lakh rupees.