How are Mutual Fund Investments Taxed?
There are many ways of investing money in the capital market. One way is to place your money in mutual funds. Mutual fund investors receive dividends on the fund units that they hold. They may also earn a profit when the value of their holdings appreciates, leading to capital gains. The difference between your initial buying price and your selling price is your capital gain.
There are two categories of capital gains based on how long you stay invested: short-term capital gains (STCG) and long-term capital gains (LTCG). Both of these categories are taxable. The mutual fund tax rates are determined by the type of fund and the holding duration. When it comes to equities, a holding period of less than a year is short term and that exceeding a year is long term. In case of debt funds, a holding duration of up to three years is considered short …
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