Taxation of Mutual Funds after Budget 2018
| Fund Type | Long term duration | Tax rate on Short Term Gain | Tax rate on Long Term Gain | Tax on dividends |
|---|---|---|---|---|
| Equity Funds (including ELSS Funds) | 1 Year | 15% | 10% no indexation* | 10%** |
| Debt Funds (including Liquid Funds) | 3 Year | Your Personal Income Tax Rate | 20% after indexation* | 25% |
| Arbitrage Funds | 1 Year | 15% | 10% no indexation* | 10%** |
| Balanced Funds | 1 Year | 15% | 10% no indexation* | 10%** |
| Other Hybrid Funds/MIPs | 3 Year | Your Personal Income Tax Rate | 20% after indexation* | 25% |
| Gold Funds | 3 Year | Your Personal Income Tax Rate | 20% after indexation* | 25% |
* LTCG in Stocks and Equity Mutual Funds upto 1 lakh in a financial year will be tax free. Tax at 10% applies to total LTCG exceeding 1 lakh at a PAN level for a financial year. LTCG tax rate was 0% earlier.
For existing equity investments, price as on 31st January 2018 will be considered as the base price for computing LTCG.
** Dividend tax rate was 0% earlier for Stocks and Equity Mutual Funds. Cess will be levied on top of the tax.