Tax Regime Specific to MF Investor applicable for FY 2024-25

Tax Regime Specific to Mutual Fund Investors in India applicable for the FY 2024-25

Equity-Oriented Mutual Funds (EOFs)

(Excluding Equity Oriented Fund of Funds)
Condition: STT must be paid on purchase and sale.

Investor Type	STCG (≤ 12 months)	LTCG (>12 months)	Dividend Taxation	TDS on Cap Gains	TDS on Dividend
Resident Individual / HUF / AOP / BOI	15% (before 23 Jul) 20% (after 23 Jul)	10% (before 23 Jul) 12.5% (after 23 Jul; > ₹1.25 lakh)	Taxed at applicable slab rate (if opted)	NIL	10%
Domestic Companies	Same as above	Same as above	Taxed at applicable corporate rate	NIL	10%
NRIs	Same as above	Same as above	Taxed at 20%	15%/20%	20%

Note:

• No indexation or foreign exchange fluctuation benefit under Section 112A.
• FMV as on 31-Jan-2018 still applicable for grandfathering LTCG.

Specified Mutual Funds (as per Section 50AA)

Definition (FY 2024-25): Funds where ≤35% of proceeds are invested in domestic equity shares.

Investor Type	STCG	LTCG	Dividend Taxation	TDS on Cap Gains	TDS on Dividend
Resident Individual / HUF / AOP / BOI	Taxed at applicable slab rate	Not applicable (All gains = STCG)	Taxed at applicable slab rate	NIL	10%
Domestic Companies	15%/22%/25%/30% depending on turnover/provisions	Not applicable	Taxed at applicable corporate rate	NIL	10%
NRIs	30% (as STCG only)	Not applicable	Taxed at 20%	30%	20%

Examples of Specified Funds (FY 2024-25):

• Fund of Funds (including overseas)
• Debt Funds (Liquid, Gilt, Bond ETFs)
• Gold ETFs
• Infrastructure Debt Funds

Effective FY 2025-26, new definition applies (MFs with >65% in debt/money market instruments).

Other Mutual Funds (e.g., Hybrid / Non-EOFs)

Investor Type	STCG	LTCG	Dividend Taxation	TDS on Cap Gains	TDS on Dividend
Resident Individual / HUF / AOP / BOI	At applicable slab rate	20% (with indexation) or 12.5%11	Taxed at applicable slab rate	NIL	10%
Domestic Companies	15%/22%/25%/30%	20% or 12.5%	Taxed at corporate rate	NIL	10%
NRIs	30% (STCG)	20% (Listed units) 10% (Unlisted units) 12.5% (Optional)	Taxed at 20%	30% (STCG) / 20% (LTCG)	20%

LTCG Indexation: Available on listed units. Optional 12.5% rate available without indexation or currency benefit. Key Notes and Amendments

1. Section 50AA (effective FY 2023–24):
   All gains on specified mutual funds (≤35% equity) acquired on or after 1 April 2023 are treated as STCG, regardless of holding period.
2. Post-23 July 2024 Tax Rates (as per Finance Act 2024):
   • STCG on EOFs: Increased from 15% → 20%
   • LTCG on EOFs: Increased from 10% → 12.5%, applicable on gains > ₹1.25 lakh
3. TDS Threshold for Dividends:
   • No TDS if dividend paid to resident < ₹5,000/year.
   • For NRIs, TDS always applies @20%.
4. Surcharge & Cess:
   • All tax rates are subject to surcharge and 4% Health & Education Cess.

Holding Period for Capital Gains Classification

Mutual Fund Type	Transfer Date	Listed Units	Unlisted Units
Non-EOF & Non-specified Mutual Fund	Before 23 July 2024	LTCG if held > 36 months	LTCG if held > 36 months
	On or after 23 July 2024	LTCG if held > 12 months	LTCG if held > 24 months

Capital Gains Tax Rates (Section 112 / 112A)

 Residents

Type of Fund	STCG	LTCG
Equity-Oriented Funds	15% (before 23 Jul) 20% (after 23 Jul)	10% (before 23 Jul) 12.5% (after 23 Jul, above ₹1.25L)
Non-EOF / Debt Funds	As per slab	20% with indexation (before 23 Jul) 12.5% without indexation (after 23 Jul)
Specified Mutual Funds	As per slab	Deemed STCG – taxed as per slab

NRIs

Fund Type	STCG	LTCG
Equity-Oriented Funds	15% / 20%	10% / 12.5% on gains > ₹1.25L
Listed Debt Funds	30%	20% with indexation (before 23 Jul) 12.5% without indexation (after 23 Jul)
Unlisted Debt Funds	30%	10% without indexation or currency benefit 12.5% (after 23 Jul, no indexation)
Specified Mutual Funds	30%	All gains treated as STCG – taxed at 30%

TDS Rates

Nature of Income	Resident Investors	Non-Resident Investors
Capital Gains – STCG / LTCG	No TDS	15% / 20% / 30% (as applicable)
Dividends (Total > ₹5,000/year)	10%	20% or DTAA rate (with TRC and disclosures)
No PAN (NRI) – Section 206AA	Not applicable	Higher of: 20% or rates in force (unless Rule 37BC conditions are met)
Non-filers – Section 206AB	2× applicable rate or 5%	Not applicable to non-residents w/o PE

Corporate Taxation

Type of Domestic Company	Applicable Tax Rate	Conditions
Regular companies (turnover ≤ ₹400 crore in FY 22-23)	25%	Default corporate tax
Companies under Section 115BAA	22%	Opt-in; no MAT; no exemptions/deductions
New manufacturing cos. under Section 115BAB	15%	Only on income from manufacturing; incidental income taxed at 22%

Surcharge & Cess

For Individuals / HUFs / AOPs

Income Range	Surcharge
₹50 lakh to ₹1 crore	10%
₹1 crore to ₹2 crore	15%
₹2 crore to ₹5 crore	25%
> ₹5 crore	37%

 Cap on surcharge:

• 15% for capital gains under Sections 111A, 112, and 112A
• 25% cap if New Tax Regime (Section 115BAC(1A)) opted

Securities Transaction Tax (STT)

Transaction	STT Rate	Payable by
Purchase of EOF units	Nil	–
Sale of EOF units (delivery-based on exchange)	0.001%	Seller
Sale of EOF units (non-delivery)	0.025%	Seller
Redemption of EOF units to the AMC	0.001%	Seller

Special Provisions

1. Bonus Stripping (Section 94(8)):

• Loss from sale of original units disallowed if:
  • Acquired ≤ 3 months before record date; and
  • Sold ≤ 9 months after record date.
• Disallowed loss added to cost of bonus units.
• Applies also to REITs, InvITs, and AIFs.

Exemptions from Capital Gains:

Transaction	Exemption Applicable
Consolidation of 2+ schemes within same category (EOF/non-EOF)	Exempt
Consolidation of plans (e.g., dividend to growth)	Exempt
Switching between plans (growth ↔ dividend) within a scheme	Taxable transfer

Segregated Portfolio Taxation:

• Cost apportioned between main and segregated portfolio.
• Based on NAV ratio at time of segregation.

Definition of EOF (Section 112A):

A Fund of Fund (FoF) qualifies as an Equity-Oriented Fund if:

• ≥90% in units of another fund traded on a recognised exchange
• That fund invests ≥90% in equity shares of Indian listed companies

If not met, treated as non-EOF and taxed accordingly.

NRI-Specific Provisions

• DTAA Override: Section 90(2) allows treaty benefits if TRC and supporting docs are submitted.
• No PAN Relief (Rule 37BC): NRI can avoid 206AA (higher TDS) if Provides TRC, name, address, tax ID, country of residence, etc.
• Section 206AB (Higher TDS for non-filers): Not applicable to NRIs without a PE in India.