How to use the mutual fund tax calculator
- Choose the fund type: an equity-oriented fund (including ELSS and equity index funds), or a debt fund bought on or after 1 April 2023.
- Enter what you invested in the units you are selling and what you will get on redemption.
- For equity, enter how long you held them, and any equity long-term gains already booked this financial year, since the ₹1.25 lakh exemption is shared across all your equity funds and shares.
- For debt, pick your income tax slab.
You get the type of gain, the exempt amount, the taxable gain, tax, cess, and what you keep.
The rules for FY 2026-27
| Fund type | Held for | Tax |
|---|---|---|
| Equity-oriented (65%+ in Indian shares) | More than 12 months | 12.5% on gains above ₹1.25 lakh a year |
| Equity-oriented | 12 months or less | 20% |
| Debt fund, bought on or after 1 April 2023 | Any period | Your slab rate |
| Debt fund, bought before 1 April 2023 | More than 24 months | 12.5%, no indexation |
Health and education cess of 4% is added to the tax. Budget 2026 left these rates unchanged.
Worked examples
| Redemption | Tax |
|---|---|
| Equity fund, ₹5 lakh grew to ₹8 lakh in 30 months, no other gains this year | ₹22,750 (12.5% on ₹1.75 lakh, plus cess) |
| Same, but ₹1.25 lakh exemption already used elsewhere | ₹39,000 |
| Equity fund, ₹5 lakh grew to ₹6 lakh in 8 months | ₹20,800 (20% plus cess) |
| Debt fund, ₹1 lakh gain, 30% slab | ₹31,200 |
Things that catch people out
- Every SIP instalment has its own clock. Units are sold first in, first out. If you started a SIP 14 months ago and redeem everything, the last two instalments are short-term.
- ELSS units are locked for three years from each instalment's date.
- The ₹1.25 lakh exemption is per financial year, per person, across all your listed shares and equity funds.
- Losses help. Capital losses can be set off against gains, and unused losses carried forward for 8 years if you file your return on time.
- Units bought before 1 February 2018 may have a higher cost for tax purposes because of grandfathering. This calculator doesn't cover that.
Using the ₹1.25 lakh exemption every year
If you hold equity funds for the long term, you can sell units with up to ₹1.25 lakh of long-term gains in a financial year and reinvest straight away. You pay no tax on that gain, and your purchase cost resets higher, which cuts future tax. Done every year, this "gain harvesting" can save up to about ₹16,250 a year. Watch the exit load and time it before 31 March.
This calculator gives an estimate for resident individuals. It does not include surcharge or hybrid, gold and international funds, which have their own rules. Please confirm your final figures with your CA.
Questions people ask
How are mutual funds taxed in India in 2026?
Equity fund gains are taxed at 12.5% (above ₹1.25 lakh a year) if held over 12 months, and 20% if held 12 months or less. Debt funds bought from 1 April 2023 onwards are taxed at your slab rate whatever the holding period. 4% cess is added.
Is there tax on mutual fund SIP?
Not while you stay invested. Tax applies only when you redeem, on the gain in the units you sell. Each instalment's holding period is counted separately.
Do I pay tax on mutual fund gains below ₹1.25 lakh?
For long-term gains on equity funds, no: the first ₹1.25 lakh in a financial year is exempt. Short-term equity gains and debt fund gains have no such exemption.
How is tax on debt mutual funds calculated now?
For debt funds bought on or after 1 April 2023, the gain is added to your income and taxed at your slab rate, regardless of how long you held the units.
Is tax deducted when I redeem a mutual fund?
For resident individuals, no tax is deducted at source on capital gains. You pay it through advance tax or when you file your return.