CapitalGains(STCG/LTCG)
Definition
The profit earned from selling an investment at a price higher than the purchase price. Short-Term Capital Gains (STCG) apply to equity funds held less than 12 months (taxed at 20%) and Long-Term Capital Gains (LTCG) apply to equity funds held over 12 months (taxed at 12.5% above Rs 1.25 lakh per year). For debt funds, all gains are taxed at slab rate regardless of holding period.
Example
If you invested Rs 5 lakh in an equity fund and redeemed Rs 7 lakh after 18 months, the Rs 2 lakh gain is LTCG. The first Rs 1.25 lakh is exempt, and the remaining Rs 75,000 is taxed at 12.5%.
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