Rupakumar Pradhan, CFPCM, CWM®

Personal Financial Advisor

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LTCG Tax for Your Mutual Funds

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LTCG Tax for Your Mutual Funds

LTCG Tax for Your Mutual Funds
May 04
14:22 2018

What is LTCG?

LTCG or Long-Term Capital Gains refer to the gains made on any class of asset held for a particular period of time. In case of equity shares, it refers to the gains made on stocks held for more than one year. In other words, if the shares are bought and held for more than a year before selling, then the gains, if any, on the said sale are referred to as Long Term Capital Gains or LTCG.

As you all already informed, your debt fund investments like MIPs and liquid funds are subjected to both Short Term Capital Gains Tax (STCG) and Long Term Capital Gains Tax (LTCG tax).

For equity investments, there has been tax only on short term capital gains. Long term capital gains have been exempted from taxation for the last 13 years in India.

This has been changed by the ‘Union Budget 2018’ was presented by the Finance Minister Arun Jaitley, on 1st Feb 2018.

Henceforth, long term capital gains on shares and equity oriented funds would be subjected to a tax of 10%.

It will be applicable for the assessment year 2019-20 (Financial Year 2018-19). In other words, long-term capital gains of over Rs 1 lakh made for the year 2018-19 will be taxed at 10 per cent.

The formula to calculate long term capital gains is:

Your purchase price minus your sale price.

For example, if you bought mutual funds for Rs 100 and sold it for Rs 110 after a year, your long term capital gains would Rs 10. You will have to pay 10 per cent tax on your long term capital gains of Rs 10. That means, your tax would be Re 1.

Now that you are aware of the taxation changes, what you need to do?

Nothing. Just continue to stay the course…….To achieve your financial goals through Mutual Fund Investments.

“Whosoever desires constant success must change his conduct with the times.” ~Niccolo Machiavelli


I am a CERTIFIED FINANCIAL PLANNERCM. For the moment, I have shared my experience growing up with you because it had a tremendous impact on how I do what I do.

If you have a question about your own financial situation please connect with me.  I’d be delighted to try to be of service.

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About Author



Mr. Pradhan has over 22 years of experience in financial services industry. He was previously working with leading Life Insurance Companies, Broking Firms, Distribution Company, Financial Planning Company and Health Insurance Company. He has cleared several NCFM modules & is also AMFI Certified. His expertise is in Comprehensive Financial Planning, Technical Analysis, Portfolio Management, Investment Advisory, Wealth Management & Business Development.

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