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Equity Mutual Fund - Capital Gains on Full Withdrawal? (Jan 2020 - Feb 2023)

T S Khurana |563 Answers |Ask -Follow

Tax Expert - Answered on Jan 20, 2025

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
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A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more

Question by Vishal on Dec 17, 2024Hindi

Money

I have been doing SIP in an equity mutual fund of Rs 2000 in an equity mutual fund from Jan 2020 to Feb 2023. The total amount has grown to 1.25 Lakh. If I make full withdrawl, how will my capital gains be taxed?

Ans: This transaction would be covered under LTCG. However, there is exemption of Rs.1,25,000.00 from LTCG & amount of your LTCG may be even less than this amount, hence no tax may be payable on this.
Most welcome for any further clarifications. Thanks.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Ramalingam Kalirajan |11160 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Apr 05, 2024

Asked by Anonymous - Jun 14, 2023Hindi

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Hello sir, I have big amount @ 25 lac invested in equity mutual funds through sip. SIP still continues. How should I withdraw my money in such a way that I can save tax on it? At same time I want to continue my sips.

Ans: To withdraw your money from equity mutual funds while minimizing tax implications and continuing your SIPs, you can consider the following strategies:

Systematic Withdrawal Plan (SWP): Opt for an SWP to withdraw a fixed amount regularly from your mutual fund investment. By withdrawing less than your gains, you may reduce the tax impact as only the capital gains portion is taxable. This allows you to continue benefiting from potential market growth while accessing funds for your needs.

Long-term Capital Gains (LTCG) Tax Benefits: If your equity mutual fund investment has completed more than one year, it qualifies for long-term capital gains tax benefits. LTCG up to Rs. 1 lakh in a financial year is tax-exempt, and any gains beyond that are taxed at 10% without indexation. Consider withdrawing within this limit to minimize tax liability.

Tax Harvesting: Assess your investments periodically and consider redeeming units with minimal gains to utilize the tax-free limit effectively. This strategy involves selling investments to realize capital losses, which can be set off against capital gains, thereby reducing your tax liability.

Rebalancing: Evaluate your portfolio regularly and rebalance it to align with your investment goals and risk tolerance. You can redeem units from overperforming funds to maintain the desired asset allocation while generating funds for your requirements.

Consult a Financial Advisor: Seeking guidance from a financial advisor can help you develop a tax-efficient withdrawal strategy tailored to your financial objectives and tax situation. They can provide personalized recommendations based on your investment horizon, risk profile, and tax-saving goals.

By employing these strategies, you can withdraw funds from your equity mutual fund investments tax-efficiently while continuing your SIPs to pursue long-term wealth accumulation. However, it's essential to assess the tax implications and consult with a financial advisor before making any decisions.

Ramalingam Kalirajan |11160 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Apr 05, 2024

Asked by Anonymous - Nov 29, 2023Hindi

Money

Hi. I am a housewife and doing small investments thru Sip in mutual funds. If I sale all mutual funds after 3 to 4 years, will i have to pay tax during IT filling or automatically tax will be deducted and funds will be credited to my bank account?

Ans: If you sell your mutual funds after holding them for 3 to 4 years, you may be subject to capital gains tax on any profit earned from the sale. The tax implications depend on whether the gains are classified as short-term or long-term capital gains.

For equity mutual funds held for more than one year, any gains exceeding Rs. 1 lakh are subject to long-term capital gains tax at a rate of 10% without indexation. However, gains up to Rs. 1 lakh are exempt from tax. For gains realized within one year of investment, they are considered short-term capital gains and taxed at a rate of 15%.

Tax on capital gains from mutual funds is not automatically deducted. It's your responsibility to calculate and report these gains while filing your income tax return. You can utilize the consolidated statement provided by your mutual fund house to determine the gains and report them accurately. If there are any taxes due, you would need to pay them while filing your income tax return.

Ramalingam Kalirajan |11160 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 13, 2024

Asked by Anonymous - May 26, 2024Hindi

Money

let me know that if i take sip of one mutual fund monthly 50000 for 5 years how will be the income tax for capital gains?

Ans: If you invest Rs 50,000 monthly in a mutual fund through SIPs for five years, the taxation of your gains depends on the type of mutual fund and the holding period. It’s important to understand how capital gains taxes work to plan your investments efficiently.

Types of Capital Gains

Short-Term Capital Gains (STCG): Gains from units held for less than three years are considered short-term. These are taxed at a higher rate.

Long-Term Capital Gains (LTCG): Gains from units held for more than three years are considered long-term. These attract a lower tax rate.

Taxation Based on Mutual Fund Type

Equity-Oriented Funds: If your mutual fund invests primarily in equity, any gains after holding for more than one year are long-term. These are taxed at 12.5% if the gain exceeds Rs 1.25 lakh in a financial year. Short-term gains (held for less than one year) are taxed at 20%.

Debt-Oriented Funds: Capital gains are added to your income and taxed at your income tax slab rate.

SIP Specific Taxation

Individual SIPs Treated Separately: Each SIP is considered a separate investment. So, if you invest Rs 50,000 monthly, each investment is tracked individually for tax purposes. For example, SIPs made in the first year will become long-term after one year, but those made in the fifth year will be short-term until the next year.

Rolling Nature of Investments: Since you’re investing monthly, you’ll have a mix of short-term and long-term capital gains when you start redeeming. You need to plan redemptions carefully to minimise taxes.

Disadvantages of Index Funds

Limited Flexibility: Index funds cannot adapt to market changes. They simply track the market, which might not always align with your financial goals.

Potential for Lower Returns: Actively managed funds can outperform the market, offering potentially higher returns. Index funds miss out on this opportunity.

The Role of Regular Funds Managed by CFPs

Expert Management: Regular funds managed by a Certified Financial Planner offer tailored advice. This ensures your investments align with your financial goals and risk profile.

Better Tax Planning: A CFP can help you manage your redemptions to minimise taxes. They can also recommend tax-efficient investment strategies.

Investment Strategy Considerations

Invest in Tax-Efficient Funds: Consider funds that offer tax benefits or have a tax-efficient structure. This can maximise your post-tax returns.

Monitor Tax Implications: Keep track of your capital gains and plan redemptions accordingly. Avoid unnecessary taxes by holding investments for the required period.

Consider Increasing SIPs Over Time: As your income grows, increase your SIP contributions. This will enhance your wealth creation without a significant increase in tax liability.

Final Insights

Investing Rs 50,000 monthly through SIPs is a strong strategy for wealth creation. However, understanding the tax implications is crucial. By focusing on the right type of funds and managing your redemptions wisely, you can optimise your returns and minimise your tax liability. Regularly consulting with a Certified Financial Planner will help ensure your investments remain tax-efficient and aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ramalingam Kalirajan |11160 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 24, 2024

Asked by Anonymous - Jul 24, 2024Hindi

Money

Dear Sir, i have been investing in mutual funds since 2008 total invested money so far is 14 lakh through sip and lumsum, now current value is around 37 lakh . what shall be my capital gain if i withdraw this amount. sandeep

Ans: Understanding Your Capital Gains
Sandeep, you have been investing in mutual funds since 2008. Your total investment is Rs 14 lakh through SIPs and lump sums. Now, the value of your investment is Rs 37 lakh.

Calculating Capital Gains
Your capital gain is the profit you earn from your investments. It is the difference between the current value and the amount you invested.

So, the calculation is:

Total Investment: Rs 14 lakh
Current Value: Rs 37 lakh
Capital Gain: Rs 37 lakh - Rs 14 lakh = Rs 23 lakh
Taxation on Capital Gains
Long-Term Capital Gains (LTCG)
Since you have held the mutual funds for more than three years, they are considered long-term investments. Long-term capital gains (LTCG) on equity mutual funds are taxed at 10% if the gains exceed Rs 1 lakh in a financial year. (In the recent budget, LTCG tax on equity mutual funds is revised to 12.5%. LTCG exemption is revised from 1 lakh to 1.25 lakh per financial year)

Steps to Consider
Plan for Taxes
Understand that LTCG above Rs 1 lakh will be taxed at 10%./ revised to 1.25 lakh and 12.5% respectively.
Calculate the tax liability on your Rs 23 lakh gain.
Reinvest Wisely
Consider reinvesting your gains in other mutual funds.
Diversify your portfolio for better risk management and returns.
Consult a Certified Financial Planner
Get professional advice to optimize your tax and investment strategy.
Benefits of Actively Managed Funds
If you decide to reinvest, consider the advantages of actively managed funds:

Expertise: Professional managers aim to outperform the market.
Flexibility: Fund managers can adjust strategies based on market conditions.
Avoid Index Funds
Limited Growth: Index funds only replicate the market.
No Active Management: Lack of professional decision-making.
Regular Funds Over Direct Funds
Expert Guidance: Regular funds come with the benefit of professional management.
Time-Saving: A CFP can manage your investments, saving you time and effort.
Final Insights
You have done well by investing regularly in mutual funds. To maximize your gains and minimize tax, plan your withdrawals carefully. Consider reinvesting in actively managed funds and consult a Certified Financial Planner for tailored advice.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Reetika Sharma |628 Answers |Ask -Follow

Financial Planner, MF and Insurance Expert - Answered on Sep 19, 2025

Question by Rajeev - Sep 11, 2025Hindi

Money

I have started sip of rs.5000/- per month since July 2017, till date i have invested approximately 5 lakh and its nav is approximately 7.6 lakh. Now I want to withdraw whole amount. My question is what will be my tax liability ?

Ans: Hi Rajeev,

I understand that there must be an emergency if you are willing to withdraw whole amount. However that is not recommended.
Have you tried taking loan against your mutual fund holdings? This is an option for you to consider.

Coming back to your question, tax liability depends on the type of fund. Equity funds are taxed as LTCG if held for more than 1 year. 12.5% tax with 1.25 exempt. For holding less than 1 year, STCG tax.
For debt funds - taxable at your tax slab if held for less than 3 years.

Do try another option if you have rather than withdrawing entirely.

Best Regards,
Reetika Sharma, Certified Financial Planner
https://www.instagram.com/cfpreetika/

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Mutual Funds, Financial Planning Expert - Answered on May 01, 2026

Question by VimalKeshari - May 01, 2026Hindi

Money

Mujhe ek Lucknow development authority ki property jo 1988-89 me allot hui thi mere father se unke registered wasiyat ke adhar par mili,jiski kul keemat jama ho gai hai aur freehold hai, Unki death 2016 me ho gai, us property ki registry mere nam lda a abhi 2026 me huee hai -mai ise vikray karna chahto hu,kripya bataey ki yah long gain capital gain ke adheen hi mana jaega tatha iski amount se koi dusari property do varsh ke bheetar kray kar sakta hu ki nahi

Ans: Your case is quite clear and favourable from a tax point of view. I will explain in simple terms.

» Nature of Capital Gain – Long Term or Short Term

The property was originally allotted to your father in 1988–89
You received it through a registered Will after his death in 2016

As per tax rules:

When property is received through inheritance, the holding period of the previous owner (your father) is also considered

So:

Holding period starts from 1988–89, not from 2016 or 2026

Hence:

On sale, it will be treated as Long Term Capital Gain (LTCG)

» Cost of Acquisition – Important Point

You can take the original cost of your father
Also, you can use indexation benefit from the year of purchase

This will reduce your taxable capital gain significantly

» Tax on Sale

LTCG on property is taxed at 20% with indexation benefit

» Exemption Option – Buying Another Property
Yes, you can save tax by reinvesting

Under Section 54:

You can buy another residential property
Time limits:
Purchase within 2 years after sale OR
Construct within 3 years

Conditions:

New property must be in your name
Capital gain amount (not full sale amount) should be invested

» Alternative Option – Capital Gains Bonds
If you do not want to buy property:

You can invest in specified bonds within 6 months
This also gives tax exemption

» Practical Suggestion

Plan the sale and reinvestment carefully
Calculate indexed cost before deciding reinvestment amount
Keep documentation of inheritance and original allotment safe

» Finally

Your gain will be treated as Long Term Capital Gain
You are eligible for indexation benefit
You can buy another property within 2 years to save tax
Proper planning can reduce tax significantly

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.linkedin.com/in/ramalingamcfp/

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Asked by Anonymous - May 01, 2026Hindi

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Hii respected sir I passed my 12th hsc in 2024 from Maharashtra state board ( pcb) and my marks scored was Physics - 65 Chemistry- 65 Biology- 82 English - 76 Fisheries- 159 And I was preparing for neet ug 2024,but unfortunately I wasn't able to make that year due to neet scam and all what happened that year... And took drop year to prepare for neet ug 2025...and was prepared enough but at the end got panicked due to the tough examination and even in my 2nd attempt I was not able to make it that year too... So I gave myself one more last chance... And got the gut to take another drop year(2nd drop for neet ug 2026)..and I started my prep in July 2025 ( with pw yakeen batch) everything was going good initially.. Was doing regular classes.. Giving mocks and all.. No stress.. And was Beleiving that this time I will definitely make it in 2026 ... But then came the actual phase of my prep.... When I saw all my friends moving out, doing different courses, and improving their lives.. While I had been stuck in the neet loop.... I felt absolutely lonely, I used to be depressed my whole day, and because of this I used to constantly regret about my past decisions that if I could have done that life could have been much better, and I faced some family problems, taunts from relatives which affected me so much mentally, I got affected by allergic asthama.. And just 3 months before neet.. My 15 days wasted due to asthama and fever... I loosed my weight.. And in January and February... I wasn't even able to sleep properly ,I was just depressed that what if I also will not be able to make this year too.. It's already my 3rd attempt... And somehow I kept going but in April I finally accepted that I will not be able to clear neet ug in 2026 too.....And at the end I just wanna say is I wasted my 3 precious neet ug attempts and 2 drop years.. Coz when you are not able to achieve anything that's totally a waste.. And now I only have two options either I regret everything and waste more time or I just move forward thinking about my career... I decided that I will take a final drop year( last attempt) for NEET 2027, I know many people will say that pls don't take it... Coz I definitely know that it will be much more difficult.. But in all the 3 attempts I gave for neet ug.. I was never able to give my best.. and I know very well from my side that if just once I gave my best na.. I will definitely clear it... But it's definitely gonna be my last attempt for 2027..and I cannot afford a 0.1% of error in my preparation... And if I didn't cleared this time.. I am definitely gonna leave this rat race... And that's why I decided to take another (3rd and last drop for neet 2027) and alternatively if I didn't cleared neet ug and didn't got into mbbs... Instead of doing other courses like bams, bhms, biotech, bsc... I decided that I will do engineering but I didn't took maths in hsc 2024 boards and that's why I wanna know about the isolated subject examination.. I heard that even if I am from pcb background... I can do engineering.. I just wanna appear for isolated subject examination maths in 2026(july) so can i give isolated exam in 2026 in July 2026 ( coz improvement exam occurs in July only) and I don't wanna wait for 2027 for maths exam..........so would I be eligible for engineering?? What I have to do further can someone pls explain me I don't have any idea about it... What I have to do further? Coz for second option if I didn't cleared neet ug 2027 I am gonna take admission in engineering in 2027 through mhtcet 2027 pcm examination. So can I do it... So what I have to do further ? Can you pls help me with it sir? And o definitely know that if I just get once the chance of mhtcet I can definitely score 95+ percentile which will help me in landing into very good engineering colleges like ict, vjti, etc.

Ans: When no magic happened in 3 attempts, what will happen in the 4th attempt? Just a waste of time and money. Not at all recommended to repeat the same exercise again and again without any solid outcome. You have a lot of excuses to escape from the studies.

Yet, to boost your morale, here is my short reply: If medicine is still your dream and you truly believe you have one best attempt left, take NEET 2027 with a disciplined “final-shot” mindset, but build a smart backup in parallel by confirming with the Maharashtra State Board of Secondary and Higher Secondary Education whether you can appear for Mathematics as an isolated or additional subject in 2026. If accepted and recognized for eligibility, that can open the path to engineering via MHT-CET/JEE as a strong Plan B, giving you both hope and security instead of an all-or-nothing gamble.

Good luck.
Follow me if you receive this reply.
Radheshyam

Radheshyam Zanwar |7055 Answers |Ask -Follow

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on May 01, 2026

Asked by Anonymous - May 01, 2026Hindi

Career

Sir i got 81.5%ile in my JEE Mains with SC Category, and 17,609 rank (Home State -Punjab) what are the best possible options for Colleges if i want to study Data Science?

Ans: Try with Punjab state engineering colleges, PTU/IKGPTU-affiliated institutes, and possibly some lower-demand NIT/GFTI branches related to CSE/IT/AI in later rounds if cutoffs align.

Good luck.
Follow me if you receive this reply.
Radheshyam

Radheshyam Zanwar |7055 Answers |Ask -Follow

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on May 01, 2026

Asked by Anonymous - May 01, 2026Hindi

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My Son 91.13 Percentile and 137639 Rank general category me aayi hai koi IIT ya Nit College Mil sakta hai btao Please

Ans: IIT admission is not possible through JEE Main, and chances with top NITs are almost nil/slim. Try with some lower-demand NIT branches/newer NITs, GFTIs, or state colleges may still be possible, depending on home state and counseling rounds.

Good luck.
Follow me if you receive this reply.
Radheshyam

Radheshyam Zanwar |7055 Answers |Ask -Follow

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Question by vishal - May 01, 2026Hindi

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Please tell me I got 82.41 percentile in jee mains with obc ncl from rajasthan can I getting nit,iiit or gftis with cse branch

Ans: You may get a government engineering college through state counseling and possibly some lower-demand GFTI/IIIT/NIT options, depending on your exact rank, home state quota, and branch flexibility

Good luck.
Follow me if you receive this reply.
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MHT-CET, IIT-JEE, NEET-UG Expert - Answered on May 01, 2026

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Sir, my daughter scored 91.35 percentile in Jee mains 2026. Obc rank 45185.CRL rank 1.34L. home state Tamilnadu. Is there a possibility for getting a seat in lower branches in mid or newer NITs under female only quota in CSAB counselling?She is also writing other Entrance exams..Bitsat, AEEE, VITEEE, SNU, Manipal. In AEEE scored 94 percentile in phase 1. Whether Csc in Amrita coimbatore campus possible to get? Which option to choose tier 3 NIT or deemed university? Please give your suggestions.

Ans: She may have a chance in CSAB for lower branches at newer/lower NITs under the female quota, though it is not certain. AEEE offers a decent shot at CSE at Amrita Coimbatore, depending on the final cutoff. Between a tier-3 NIT and a strong deemed university, choose the one with better branch/placement outcomes rather than the NIT tag alone.

Good luck.
Follow me if you receive this reply.
Radheshyam

Asked on - May 01, 2026 | Answered on May 01, 2026

Thank you sir for your valuable reply.

Ans: Welcome. If not followed, pl follow me.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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