How to calculate capital gains in equity and debt mutual funds?
- Prakash
Capital gain is simply calculated as the difference between investment amount and current market value of your investments. From a taxation perspective, equity mutual fund units held for more than 12 months are considered as long term and for debt mutual funds, units held for more than 36 months are considered as long term. Holding period of less than 12 months for equity mutual funds and less than 36 months for debt mutual funds are considered as short term.
In the union budget for 2018-19, it was announced that Long Term Capital Gains (LTCG), in excess of Rs 1 lakh, from listed equity shares, equity-oriented funds and unit of a business trust to be taxed at the rate of 10%, without the benefit of indexation. However, gains up to 31st Jan’18 will be Grandfathered i.e. for the calculation of LTCG, the reference price will be either, the price as of 31st Jan’18 or the actual cost of acquisition, whichever is higher. Short Term Capital Gains (STCG) tax rate for equity mutual funds is 15%. For debt mutual funds, applicable STCG tax rate is as per the investors income tax bracket and LTCG tax rate is 20% with indexation benefit.
