Mutual funds are one of the most popular investment avenues for Indian investors. But with tax rules changing frequently, understanding the tax implications of different fund types is crucial. A smart investor should focus not just on returns, but also on how much they get to keep after tax . The Union Budget 2024–25 reaffirmed changes introduced earlier: equity funds continue to enjoy favorable tax treatment, while debt funds have lost most of their advantages. Let’s explore the updated tax rules and see which strategy — Lumpsum, SIP, or STP — is most tax-efficient in 2025. 1. Tax Rules for Equity Mutual Funds Short-Term Capital Gains (STCG): 20% if units are sold within 12 months. Long-Term Capital Gains (LTCG): 12.5% beyond an annual exemption of ₹1.25 lakh. This makes equity-oriented funds still the most tax-efficient option for long-term wealth creation. 2. Tax Rules for Debt Mutual Funds The taxation of debt funds has changed dramatically: Investments made before...
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