Mutual Fund Return & Tax Calculator
Calculate your gross and post-tax in-hand returns on equity and debt mutual funds under the current Indian capital gains tax law (FY 2026-27).
Current Indian Mutual Fund Taxation Rules (Applicable for FY 2026-27)
Under current Indian tax laws applicable for FY 2026-27 (Assessment Year 2027-28), capital gains taxation for mutual funds follows standardized statutory provisions. Understanding these rules helps you harvest gains strategically and maximize net in-hand wealth:
Equity Funds (>65% Equity)
- LTCG (> 12 Months): 12.5% tax rate. The first ₹1.25 Lakh of total equity gains across mutual funds per financial year is completely tax-free under Section 112A!
- STCG (≤ 12 Months): Taxed at 20% without basic exemption under Section 111A.
Debt Mutual Funds
- All capital gains from specified debt mutual funds (with ≤35% equity) are deemed short-term capital gains and taxed at the investor's applicable income tax slab rate (Section 50AA).
- No indexation benefit is available.
Frequently Asked Questions
Clear answers to common questions on formulas, taxation, and investing strategy.
Q1. What is the current LTCG exemption limit on equity mutual funds?
Under Section 112A of the Indian Income Tax Act (applicable for FY 2026-27), the annual Long-Term Capital Gains (LTCG) tax exemption limit on equity investments is ₹1.25 Lakh per financial year. Long-term gains exceeding this limit are taxed at a flat 12.5%.
Q2. How can I legally save tax using Tax Loss / Tax Gain Harvesting?
By redeeming and immediately reinvesting up to ₹1.25 Lakh of long-term profits every financial year, you reset your acquisition cost basis to current market prices with zero tax liability, saving thousands in future taxes.
Q3. Are mutual fund returns taxed during the holding period?
No! In growth-option mutual funds, you owe zero tax until you actually sell or redeem units. Capital continues compounding uninterrupted for years without annual TDS deductions.
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