How your gains are taxed
How long you hold decides the tax
Tax is the topic people memorise and still get wrong. The fix is to stop memorising and follow one person through one year. Meet Meena.
Exact tax rates change with each Union Budget. The full lesson shows the current figure and its source, and updates when the Budget does. This is education, not financial advice.
- 1
Two things set your tax: how long you held, and equity versus debt.
- 2
For an equity fund, 12 months is the line between short term and long term.
- 3
The clock starts the day you buy, not the day you decide to sell.
- 4
Debt funds follow different rules, so do not assume they match equity.
Buy an equity fund in January, sell in August the same year. Held under 12 months, so the gain is short term.
In January, Meena buys units of an equity fund. She notes the date, because that is when her clock starts ticking.
The clock starts on the buy dateIn August, seven months later, she sells some units for a trip. Held under 12 months, so this gain is short term.
Under 12 months is short termThe rest she keeps. Two years on, she sells them for a home down payment. Held over 12 months, so this gain is long term.
Over 12 months is long termSame fund, same Meena. Only the holding time changed the label on the gain.
For equity funds, 12 months is the line. Under it short, over it long.
Practice
🔥 0 streakReal exam format. Answer by voice, tap, or press 1 to 4. No negative marking, so always attempt.
Ravi sells his equity fund units 8 months after buying them. His gain is treated as:
Units of an equity fund held for exactly 14 months and then sold at a gain give:
The holding-period clock for a fund gain starts on:
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Education for the exam, not financial advice. Answers can be wrong, so confirm figures against the workbook.