Tax Implications on Mutual Fund Gains

If investment is in equity that is at least 65 per cent of its assets in equities:

•  If you hold your investements for less than one year then pay short-term capital gains tax on your earnings @ 15.45%
•  If you hold onto your investments for more than one year, then the long-term capital gains from them are tax-free in your hands.

 If you are investing in a debt fund:

•   Short-term capital gains from it are added to your taxable income
•  Long-term capital gains from debt funds, on investments held for more than one year, are subject to either 10 per cent flat capital gains tax or 20 per cent capital gains tax after indexation.