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Asked a question 2 years ago

Does the 20% LTCG tax rate and indexation benefit, applicable for both the debt fund and equity fund redemption after 3 years?

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Hi George,

For equity funds, the time period for the calculation of LTCG tax rate is 1 year, if the holding period is less than one year, then it is treated as Short Term Capital Gain (STCG). LTCG is made taxable over 1 lakh on listed equity shares is made taxable at the rate of 10% without the benefit of indexation. STCG is taxed at a rate of 15%. For debt funds, the period of calculation of LTCG and STCG is 3 years, which means if the holdings are sold before completion of three years, then it is treated as STCG and if after 3 years, then it is LTCG. LTCG is taxed at a flat rate of 20% with indexation benefit. For STCG, the gains/returns are added to the income and are taxed according to the slab rate of the income tax. 

Hope this helps!