I purchased debt mutual funds (money market) in 2018 and sold them in 2025. Since the purchase was before 2023, it can be taxed at 12.5% as per the grandfathering clause.
But my total income is less than 8 lakhs, which means my applicable slab rate will be 0 to 5% only.
Can I opt out of the special rate and show the LTCG under applicable rate without using the grandfathering clause? In this case will it be eligible for rebate under section 87A? Then there will be no tax to be paid.
Thanks.
For debt mutual funds purchased before 1 April 2023 and sold in 2025, the applicable LTCG tax rate is the special rate (12.5%, subject to eligibility under the grandfathering provisions). You cannot switch to slab-rate taxation to claim Section 87A rebate. The only relief generally available is adjustment of any unutilized basic exemption limit against the LTCG before tax is calculated.
Gowra Ventures Pvt Ltd
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