If the investment in mutual funds is held for less than one year, then the capital gains are considered short-term capital gains.
- A short-term tax on capital gains (STCG) applies to equity mutual fund investments that last no more than one year. In this case, the tax rate is 15% of the gains.
- In the case of equity mutual fund investments made for more than one-year, long-term capital gains (LTCG) rules apply. Incremental gains over Rs. 1 lakh in a financial year are taxed at 10%.