Income tax returns: Are capital benefits from MFS separately under new and old regime? What taxpayers should know about new LTCG, STCG rules
Income Tax Return Filing AY 2025-26: An important aspect of income tax return filing, apart from salary reporting from salary, is also filling in any capital gain details-a long-term or long-term-which you have created during the financial year.If you are wondering whether the taxation of capital gains made from mutual funds varies between the new and old Income Tax regime, then we have covered you.
Capital benefits from MFS: How does taxation work?
Capital benefits from the sale of mutual funds (MFS) are taxable in India under the old and new income tax systems. The classification of MF, the method of calculating capital gains, is not affected by the choice of income tax regime by a person. Parizad Sirwala in India, partner and head, global mobility services, tax, KPMG, Parizad Sirwala, Partner and Head, KPMG, says, “All cuts available while calculating capital benefits, including reinstruction in new assets, are equally available under new and old income tax system.”Also read ITR e-filing FY 2024-25: What is the benefit of pre-ITR forms on the Income Tax Portal? Top pointIn general, from the perspective of tax capacity, MFS is broadly classified into equity MFS and non-equity MFS. There is also a special category of MF specified within non-equity MFS.Parizad tells Sirwalla toi toi, “Effective 23 July 2024, benefits from the sale of equity MFS, if held for more than 12 months, is classified as long (LTCG) and benefits (more than Rs 1.25 lakh) are taxable at 12.50%.
- Benefits from the sale of non -equity MFS are held for more than 24 months, it is considered LTCG and taxable.
- STCG income tax from sales of non-equity MF is taxable according to the rates.
- In addition, benefits from specified MF are considered taxable despite the holding period and tax slab rates. The overload and cess apply applied to the above tax rates are applied
“Tax slab rates, surcharge rates and applicable exemptions will implement merit to the chosen tax regime. The maximum surcharge under the old tax regime is 37% (trigger beyond income of Rs 5 crore), while it is limited to 25% under the new regime (beyond income of Rs 2 crore. MF,” Says Parijad Sirwalla.Also read ITR E-Filing Ay 2025-25: What is the annual information details (AIS) and how is this form different from 26AS? Top point for taxpayers
