Mutual Fund Taxation 2026
Equity, debt, hybrid and other funds — STCG, LTCG, IDCW and TDS.
Updated 30 September 2026 · SEBI rules as of 2026Overview
Tax depends on the fund type and holding period. After the July 2024 changes, equity-oriented funds pay 20% STCG and 12.5% LTCG above ₹1.25 lakh a year; debt funds bought on or after 1 April 2023 are taxed at slab rate; other funds (e.g. gold, international FoFs) pay 12.5% LTCG after 24 months. IDCW is taxed at slab. From tax year 2026-27 these provisions sit in the Income-tax Act, 2025.
| Particular | Details |
|---|---|
| Equity-oriented (≥ 65% domestic equity) | STCG 20% (< 12 m); LTCG 12.5% above ₹1.25 lakh |
| Debt (bought on/after 1 Apr 2023) | Slab rate, any holding period |
| Other funds (gold/intl FoF, some hybrids) | LTCG 12.5% after 24 m; STCG slab |
| IDCW | Slab rate; TDS 10% above ₹10,000 per AMC per FY |
| STT | 0.001% on equity fund redemption |
| ELSS deduction | Up to ₹1.5 lakh (old regime) |
Tax table
| Fund type | Long-term after | STCG | LTCG |
|---|---|---|---|
| Equity / aggressive hybrid / arbitrage | 12 months | 20% | 12.5% above ₹1.25 lakh |
| Debt funds (new) | — | Slab | Slab |
| Debt funds (bought before 1 Apr 2023) | 24 months | Slab | 12.5% |
| Gold / silver ETF | 12 months | Slab | 12.5% |
| Gold / intl FoF, other funds | 24 months | Slab | 12.5% |
Tax-harvesting tip
Equity LTCG up to ₹1.25 lakh per financial year is exempt. Some investors redeem and reinvest to use this exemption each year (consider exit load and costs).
Budget 2026 note
Budget 2026 removed the deduction for interest expenses against dividend and mutual fund income under the Income-tax Act, 2025.
Frequently asked questions
Is SIP taxed per instalment?
Yes — each instalment’s holding period is computed separately on FIFO basis.
Are switches taxable?
Yes, a switch is a redemption.
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