1. What is Mutual Fund Redemption Tax?

Mutual Fund Redemption Tax refers to the capital gains tax applicable when you redeem or sell your mutual fund units in India. The tax rate varies based on fund type (equity or debt) and holding period as per Indian tax laws for FY 2025-26.

2. How Does the Calculator Work?

The calculator uses the capital gains tax formula:

Where:

• \( Gains \) — Capital gains from mutual fund redemption (INR)
• \( Rate \) — Applicable tax rate based on:
• Equity Funds: STCG 20% (<1 year), LTCG 12.5% (>₹1.25L >1 year)
• Debt Funds: 12.5% LTCG (>2 years holding period)

Explanation: The calculator determines the appropriate tax rate based on your fund type and holding period, then calculates the tax liability on your capital gains.

3. Importance of Tax Calculation

Details: Accurate tax calculation helps in financial planning, understanding net returns from investments, and ensuring compliance with Indian tax regulations. Proper tax planning can optimize your post-tax returns.

4. Using the Calculator

Tips: Enter your capital gains amount in INR, select the type of mutual fund (equity or debt), and input the holding period in years. The calculator will automatically determine the applicable tax rate and calculate your tax liability.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between STCG and LTCG?
A: Short-term capital gains (STCG) apply to investments held for less than specified periods, while long-term capital gains (LTCG) apply to longer holding periods with different tax rates.

Q2: Is there any exemption limit for mutual fund taxes?
A: For equity funds, LTCG up to ₹1,25,000 per financial year is exempt from tax. There's no basic exemption limit for STCG or debt fund taxes.

Q3: How is holding period calculated?
A: Holding period is calculated from the date of purchase to the date of redemption/sale. Use the first-in-first-out (FIFO) method for multiple purchases.

Q4: Are there any additional charges besides tax?
A: Besides capital gains tax, you may need to pay cess and surcharge if applicable. Exit load may also apply if redeemed before specified period.

Q5: Can I set off losses against gains?
A: Yes, capital losses can be set off against capital gains of the same type (short-term against short-term, long-term against long-term) and carried forward for 8 assessment years.