Short term gain or long term gain

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 June 2013 Sir,

I am investing Rs.2000/-monthly into Mutual Fund for the last two years. Now i want to sell it. If i sold it on today. Please confirm that it will be considered under Short Term Gain or Long Term Gain.

Awaiting ur reply.

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2013 awaiting reply

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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25 July 2025 For your mutual fund investment, here’s how the capital gain classification works under Income Tax rules in India:

1. Type of Mutual Fund:
Equity-oriented mutual funds (where at least 65% of the portfolio is invested in equity shares)

Debt-oriented mutual funds (mostly invested in debt instruments like bonds, government securities, etc.)

2. Holding Period to Determine Short Term or Long Term:
Fund Type Holding Period for Long Term Gain Type if held for less than Long Term period
Equity Mutual Funds More than 12 months Short Term Capital Gain (STCG)
Debt Mutual Funds More than 36 months (3 years) Short Term Capital Gain (STCG)

3. Your Case:
You are investing Rs. 2000 monthly for the last 2 years.

Each investment installment will have its own purchase date.

For each installment:

If you sell today and the holding period of that installment is more than 12 months (if equity fund) → Long Term Capital Gain (LTCG)

If less than 12 months → Short Term Capital Gain (STCG)

So, since you invested monthly for 2 years, some units may qualify for LTCG, some for STCG based on their individual holding period.

4. Important Notes:
For Equity Mutual Funds:

LTCG above ₹1 lakh in a financial year is taxed at 10% without indexation.

STCG is taxed at 15%.

For Debt Mutual Funds:

LTCG is taxed at your applicable slab rate with indexation benefits.

STCG is added to your income and taxed as per your slab.

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