Short Term Capital Gains on equity mutual funds and stocks are now taxed at 20% flat (Budget 2024 — increased from 15%). Calculate your exact STCG tax before you redeem.
If you sell equity mutual funds within 12 months of buying, every rupee of profit is Short Term Capital Gain (STCG) — taxed at a flat 20% (Budget 2024), with no exemption, no deductions. It doesn't matter if the gain is ₹5,000 or ₹5 lakh. If you held it less than 12 months, 20% goes to the government. This calculator shows you exactly how much tax you'll pay — and how many months you need to wait to save it.
Rajan invested ₹2,00,000 in an equity fund in August 2024. By February 2025 (6 months later), it's worth ₹2,40,000. The market looks shaky. He sells.
📌 Gain: ₹40,000
📌 STCG tax at 20%: ₹8,000
📌 In-hand: ₹32,000
Now suppose Rajan had waited just 6 more months (until August 2025 — the 12-month mark). Same ₹40,000 gain becomes LTCG. Since ₹40,000 < ₹1,25,000 exemption limit: Tax = ₹0. Full ₹40,000 in his pocket.
Tax saved by waiting 6 months: ₹8,000 — that's a 25% return on the tax amount itself.
For most retail investors with gains under ₹1.25 lakh, waiting just past the 12-month mark turns a 20% STCG bill into a ₹0 LTCG bill (since the first ₹1.25L is exempt). The only time selling early makes sense is when the market is falling sharply and the tax cost is less than the expected further loss — but this requires accurate market prediction, which is very difficult.
Panic selling during market corrections. The average equity fund correction lasts 6–18 months. If you sell during a panic at month 8 (STCG), you pay 20% tax on whatever gain you had, miss the recovery, and then need to re-enter at a higher price. STCG + missed recovery + re-entry costs can erase 2–3 years of investment gains. Time in the market beats timing the market.
Equity funds redeemed within 12 months attract 20% STCG — no exemption, no indexation. Know your tax before you redeem.