Mutual Funds and SIPs in India
Taxation of Mutual Funds
Gains are taxed depending on the fund type and holding period, and tax-saving ELSS funds carry a lock-in.
Taxes affect what you keep.
Equity funds
Gains on units held over one year are long-term, taxed above an annual exemption; shorter holdings are taxed at a higher short-term rate.
Rules change
Rates and rules are revised in budgets, so check current rules.
ELSS
Equity-linked savings schemes qualify for a deduction under the old tax regime and have a three-year lock-in.
Debt funds
Their taxation has also changed, and is generally at the investor’s slab rate for many recent purchases.
A holding period
Selling after 13 months instead of 11 can change the tax rate on gains.
Ignoring tax when comparing options
Post-tax return is what counts.
Key takeaways
- Tax depends on fund type and period.
- Rules change often.
- ELSS has a 3-year lock-in.
- Post-tax return matters.
No recording for this one yet - EconReader can read it aloud for you.