Updated 2026-07-11

How to Calculate Capital Gains Tax on Mutual Funds

Capital-gains tax starts with the gain, not the redemption amount. Subtract eligible cost and expenses, classify the fund and acquisition date, then apply the holding-period and rate rules.

Worked equity-fund example

₹2,00,000 long-term gain

If the annual eligible equity LTCG exemption is unused, ₹75,000 is taxable after the ₹1.25 lakh threshold; at 12.5%, tax is ₹9,375 before cess.

Equity-oriented fund example

Assume listed equity-oriented fund units bought on 1 April 2024 for ₹8 lakh and sold on 2 April 2026 for ₹10 lakh, with the Section 112A STT conditions met. The holding period exceeds 12 months, so the ₹2,00,000 gain is long-term. After an unused ₹1.25 lakh annual threshold, ₹75,000 remains taxable at the applicable special rate.

Step Amount
Sale value₹10,00,000
Cost₹8,00,000
Long-term gain₹2,00,000
Less unused annual threshold₹1,25,000
Taxable LTCG₹75,000
Tax before cess at 12.5%₹9,375

Debt and other specified mutual funds

Do not reuse the equity table for every mutual fund. Fund composition, purchase date and the statutory definition of a specified mutual fund can change whether the gain receives long-term treatment or is taxed at slab rates.

A separate ₹15 lakh salary-only scenario calls the Income Tax Calculator and returns ₹97,500 under the new regime. The ₹9,375 equity LTCG calculation stays separate because special-rate gains cannot be treated as salary or ordinary slab-rate income.

Check the official rules

Tax rules depend on the financial year and the facts of your return. Verify the current provisions on the Income Tax Department portal before filing.

Frequently Asked Questions

Is mutual-fund redemption fully taxable?
No. Tax generally applies to the gain, calculated from sale consideration less eligible cost and expenses, not to the full redemption proceeds.
What is the equity mutual-fund LTCG threshold?
Eligible aggregate long-term gains covered by Section 112A have an annual ₹1.25 lakh threshold under the current rules. Gains above it are taxed at the applicable special rate.
Can I put capital gains into the salary calculator?
Use the income-tax calculator for a rough total-income view, but special-rate gains need separate treatment in the return. Do not treat the full sale value as salary.
Try it yourself → Income Tax Calculator

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Written by Amir Khan, a contributor to RupeeReality: free financial calculators for Indian investors. All calculations use standard financial formulas cross-referenced against established platforms. Numbers updated for FY 2026-27. Not financial advice.