How are equity mutual fund returns taxed in India?

The gains from mutual funds are taxed as Capital Gain Tax. The tax rates vary basis the holding period of the investor (Short Term or Long Term). Gains from sale of mutual fund units held over 1 year are considered as Long Term Capital Gains. The gains exceeding ₹ 1.25 lakh in a financial year are taxed at 12.50%. Gains from the sale of any units of equity-oriented funds within a year of investing are considered as Short Term Capital Gains and are taxed at 20%. These rates are subject to revision from time to time as per the decision of Finance Ministry. For updated rates, check the Income Tax portal.