Are mutual funds subject to tax? What taxes apply on Withdrawals?

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HomeMutual FundAre mutual funds subject to tax? What taxes apply on Withdrawals?

Yes, mutual funds are subject to taxation. For tax purposes, they are classified into two categories – Equity-Oriented Funds and Other than Equity-Oriented Funds (Debt/Hybrid, etc.). The applicable tax rates are as follows:

Type of Mutual Fund Short Term Capital Gain (STCG) Long Term capital Gain (LTCG)
Equity-Oriented 20% (if held for less than 1 year) 12.5% (on gains above Rs.1.25 lacs if held for over 1 year)
Other than Equity-Oriented Applicable slab rate 12.5% (if held for over 2 years)