STCG on WebNotes

CAMS and KFin capital gains statement for mutual funds

Tue, 12 May 2026 00:00:00 +0000

The CAMS and KFin capital gains statement is a tax computation report generated by the two principal Registrar and Transfer Agents (RTAs) for Indian mutual funds – CAMS (Computer Age Management Services) and KFintech (KFin Technologies) – that computes the capital gain or loss arising from mutual fund unit redemptions during any specified date range. The statement applies the FIFO (first-in, first-out) method to assign purchase costs to each redeemed lot, segregates gains into short-term capital gains (STCG) and long-term capital gains (LTCG), and optionally applies cost indexation for qualifying debt fund holdings. It is the foundational tax document for mutual fund investors preparing to file an income-tax return.

Holding-period statement for mutual funds

Tue, 12 May 2026 00:00:00 +0000

A holding-period statement for mutual fund units is a pre-redemption planning document generated by RTAs (CAMS and KFintech) and available through platforms such as MFCentral, that lists each individual purchase lot held in a folio with its purchase date, purchase NAV, cost of acquisition, number of units in the lot, and the number of days (or months and years) the lot has been held as of the statement generation date. Investors use the holding-period statement to determine which lots of units have crossed the threshold for long-term capital gains (LTCG) treatment and to plan redemptions in a tax-efficient manner.

How to do tax-loss harvesting on Zerodha at year-end

Tue, 12 May 2026 00:00:00 +0000

Tax-loss harvesting is the practice of selling securities that are showing an unrealised loss before the end of the financial year to realise the loss, offset it against capital gains, and reduce the overall tax liability. Under the Income Tax Act 1961 and as amended by the Finance Act 2024, capital gains tax rates on listed equity are 20% for short-term gains (section 111A) and 12.5% on LTCG above Rs 1.25 lakh (section 112A). Harvesting losses before 31 March can meaningfully reduce the taxable gain, particularly for investors who have accumulated significant unrealised losses in a falling market.

How to download the capital gains statement on Zerodha

Tue, 12 May 2026 00:00:00 +0000

The capital gains statement available through Zerodha Console consolidates every equity delivery sale in a financial year, computes the holding period, and maps each gain or loss to the correct section of the Income Tax Act, 1961. The statement is the primary input for Schedule CG and Schedule 112A in ITR-2 or ITR-3. This guide walks through the download procedure, explains the key columns, and flags the Finance Act 2024 rate changes that apply from 23 July 2024.

How to file ITR-2 with Zerodha capital gains

Tue, 12 May 2026 00:00:00 +0000

ITR-2 is the income tax return form for resident individuals and Hindu Undivided Families (HUFs) who have capital gains from equity, debt, or other securities but do not carry on any business or profession. If your Zerodha account has only equity delivery trades and no F&O activity classified as business income, ITR-2 is typically the correct form. This guide walks through the end-to-end filing process for Assessment Year 2025-26 (Financial Year 2024-25) using the capital gains report downloaded from Zerodha Console.

ITR-ready capital gains statement for mutual funds

Tue, 12 May 2026 00:00:00 +0000

The ITR-ready capital gains statement for mutual funds is a tax computation document generated by Registrar and Transfer Agents (RTAs) – principally CAMS and KFintech – as well as by the joint portal MFCentral, that calculates the taxable capital gain or loss arising from mutual fund redemptions during a financial year. The statement applies the first-in, first-out (FIFO) method mandated under Indian income-tax rules, segregates gains into short-term capital gains (STCG) and long-term capital gains (LTCG), and presents the output in a format aligned with Schedule CG of ITR-2 or ITR-3. Investors use this document as the primary tax computation input when filing their annual income-tax return.

MF switch as a taxable event

Tue, 12 May 2026 00:00:00 +0000

A switch in mutual funds is a taxable event under the Income Tax Act 1961. When an investor switches from one mutual fund scheme to another – or from the regular plan to the direct plan of the same scheme, or from the IDCW option to the growth option – it constitutes a “transfer” within the meaning of Section 2(47) of the Income Tax Act 1961. At the moment of the switch, units in the source scheme are deemed to have been redeemed at the prevailing switching NAV, and new units are allotted in the destination scheme at the same NAV. Capital gains (or losses) crystallise in the source scheme on the switch date, and the holding period for the new units in the destination scheme begins on the switch date.

STCG on equity mutual funds (Section 111A)

Tue, 12 May 2026 00:00:00 +0000

Short-term capital gains (STCG) on equity-oriented mutual funds are taxed under Section 111A of the Income Tax Act 1961 at a flat rate that is independent of the investor’s income-tax slab. The Finance Act 2024 raised the Section 111A rate from 15% to 20% with effect from 23 July 2024. Section 111A applies only where Securities Transaction Tax (STT) has been paid on the redemption transaction. Where STT has not been paid, the STCG is excluded from Section 111A and is added to total income at the applicable slab rate.

Taxation of arbitrage funds (equity-oriented)

Tue, 12 May 2026 00:00:00 +0000

Taxation of arbitrage funds in India mirrors the taxation of equity-oriented mutual funds because SEBI mandates that arbitrage funds maintain at least 65% of their assets in equity (through simultaneous long cash and short futures positions), placing them within the equity-oriented classification for income-tax purposes. Capital gains on arbitrage fund units are taxed under Section 111A (STCG at 20%, effective 23 July 2024) if held for 12 months or less, or under Section 112A (LTCG at 12.5% above Rs 1,25,000) if held for more than 12 months. This tax treatment makes arbitrage funds materially more efficient than liquid funds or ultra-short-duration debt funds for investors in higher income-tax brackets, especially for parking short-term surpluses for periods of three months or more.

Taxation of debt mutual funds (post-April 2023)

Tue, 12 May 2026 00:00:00 +0000

Taxation of debt mutual funds in India underwent a fundamental change with effect from 1 April 2023 under the Finance Act 2023. Before that date, debt mutual fund units held for more than 36 months qualified as long-term capital assets and were taxed at 20% with the benefit of indexation under Section 48 of the Income Tax Act 1961. The Finance Act 2023 inserted the third proviso to Section 50AA (later renumbered as applicable amendments in the Schedule), which provides that the capital gains on specified mutual funds – those investing less than 65% of their assets in domestic equity – shall be treated as short-term regardless of the actual holding period, and shall be included in total income and taxed at the investor’s applicable income-tax slab rate. The regime for units acquired on or after 1 April 2023 is now uniformly slab-rate taxation with no indexation and no concept of long-term holding for such funds.

Taxation of equity mutual funds in India

Tue, 12 May 2026 00:00:00 +0000

Taxation of equity mutual funds in India is governed principally by Sections 111A and 112A of the Income Tax Act 1961, with rates last revised by the Finance Act 2024 with effect from 23 July 2024. An equity-oriented mutual fund, as defined under Section 112A(10), is a fund that invests at least 65% of its total proceeds in equity shares of domestic companies. Capital gains on such funds are split into short-term capital gains (STCG) if the units are held for twelve months or less, and long-term capital gains (LTCG) if held for more than twelve months. As of 23 July 2024, STCG is taxed at 20% under Section 111A and LTCG exceeding Rs 1,25,000 per financial year is taxed at 12.5% under Section 112A, without the benefit of indexation. Dividend income distributed by equity funds, renamed Income Distribution cum Capital Withdrawal (IDCW) by SEBI in 2021, is taxed as ordinary income at slab rates.

Taxation of Fund of Funds (revised 2024)

Tue, 12 May 2026 00:00:00 +0000

Taxation of Fund of Funds (FoFs) in India was revised by the Finance Act 2024, effective 23 July 2024, to create a favourable classification for domestic equity FoFs that invest predominantly in equity-oriented domestic mutual funds. Under the pre-2024 framework, all FoFs – regardless of whether they invested in equity or debt underlying funds – were classified as non-equity and taxed either under Section 112 (LTCG with indexation, pre-April 2023) or as specified mutual funds at slab rate (post-April 2023, per Finance Act 2023). The Finance Act 2024 introduced a new sub-category: a domestic equity FoF that invests at least 90% of its assets in equity-oriented domestic mutual funds now qualifies as equity-oriented and is taxed under Sections 111A and 112A like a direct equity mutual fund.

Taxation of hybrid mutual funds in India

Tue, 12 May 2026 00:00:00 +0000

Taxation of hybrid mutual funds in India is determined primarily by the equity allocation of the fund, which places it into one of three tax buckets: equity-oriented (more than 65% in domestic equity), specified mutual fund (35% or less in domestic equity), or a residual intermediate category that existed briefly before the Finance Act 2023 reforms. Hybrid funds span the spectrum from aggressive hybrid funds (65-80% equity) to conservative hybrid funds (10-25% equity), and their tax treatment tracks the actual allocation rather than the category label. With the Finance Act 2023 eliminating the LTCG with indexation benefit for funds below the 65% equity threshold, and the Finance Act 2024 revising STCG and LTCG rates on equity-oriented funds, hybrid fund investors must pay particular attention to the equity allocation at the time of investment and at the time of redemption.

Taxation of SIPs (FIFO method)

Tue, 12 May 2026 00:00:00 +0000

Taxation of Systematic Investment Plans (SIPs) in India follows the same capital gains framework as lump-sum mutual fund investments, but with a critical difference in lot tracking: each SIP instalment creates a separate lot of units with its own acquisition date and purchase NAV. When units are redeemed, the tax computation must identify which lot is being redeemed and what the holding period of that lot is. The income-tax rules and mutual fund industry practice both apply the FIFO (First In, First Out) method, meaning the earliest-purchased units are treated as sold first. This creates a situation where a SIP investor who redeems a portion of their holdings may have a mix of long-term and short-term units in the same redemption transaction.

Taxation of STP transactions in mutual funds

Tue, 12 May 2026 00:00:00 +0000

Taxation of Systematic Transfer Plan (STP) transactions in mutual funds follows the same capital gains framework as any partial redemption. An STP is a facility that automatically transfers a fixed amount (or fixed units) from one mutual fund scheme (the “source” fund) to another scheme (the “target” fund) of the same AMC at regular intervals. Each STP transfer is treated as a partial redemption from the source fund and a simultaneous fresh purchase in the target fund. Capital gains crystallise on the source-fund units redeemed at the STP transfer date, and the target-fund units acquire a new holding period starting from the transfer date. There is no provision for deferred taxation or rollover relief for STP transactions under the Income Tax Act 1961.

Taxation of SWP withdrawals from mutual funds

Tue, 12 May 2026 00:00:00 +0000

Taxation of Systematic Withdrawal Plan (SWP) withdrawals from mutual funds follows the standard capital gains framework applied to partial redemptions. A SWP is a facility offered by mutual fund houses that allows investors to redeem a fixed amount (or fixed number of units) at regular intervals – typically monthly, quarterly, or annually. Each SWP instalment is treated as a partial redemption of units, and capital gains (or losses) crystallise on the redeemed units at the time of each withdrawal. The FIFO method is applied to identify which lot of units is being redeemed in each instalment, and the holding period of the identified lot determines whether the gain is short-term or long-term. SWP withdrawals are fundamentally different from IDCW (dividend) distributions in their tax treatment: unlike IDCW, which is taxed at slab rates as income from the fund, SWP withdrawals return a mix of capital (original investment) and capital gains, of which only the gains element is taxable.

TDS on MF redemption for NRIs (Section 195)

Tue, 12 May 2026 00:00:00 +0000

Tax Deducted at Source (TDS) on mutual fund redemptions for Non-Resident Indians (NRIs) is governed by Section 195 of the Income Tax Act 1961. Unlike resident investors who are not subject to TDS on capital gains from mutual fund redemptions, NRI investors are subject to TDS withheld by the fund house (AMC) at the time of redemption, before the net proceeds are credited to the investor’s NRE or NRO account. The TDS rate depends on the type of capital gain (short-term or long-term) and the fund classification (equity-oriented or non-equity), and is applied on gross redemption proceeds without deducting the Rs 1,25,000 annual LTCG exemption. Excess TDS can be reclaimed by the NRI by filing an income-tax return in India.

Console Tax P&L statement

Mon, 11 May 2026 00:00:00 +0000

Overview

The Console Tax P&L statement is a structured profit and loss report generated by Zerodha Console for a specified financial year. Unlike the raw Tradebook, which lists individual executions chronologically, the Tax P&L statement applies the First In, First Out (FIFO) cost-allocation method mandated by the Income Tax Act, 1961 to compute realised gains and losses at the scrip level. The output is segmented by holding period (short-term versus long-term for equity) and by income head (capital gains versus business income for F&O and intraday), making it directly usable in the appropriate schedule of the ITR.

ITR-2 (Income Tax Return)

Mon, 11 May 2026 00:00:00 +0000

ITR-2 is the Income Tax Return form prescribed by the Central Board of Direct Taxes (CBDT) for use by individuals and Hindu Undivided Families (HUFs) who have income from sources other than profits and gains from business or profession. It is the form most commonly used by salaried employees and pensioners who also have capital gains from the sale of equity shares, equity mutual funds, property, or other assets, but who do not carry on any business activity.

ITR-ready capital gains statement

Mon, 11 May 2026 00:00:00 +0000

Overview

The ITR-ready capital gains statement is a formatted report generated by Zerodha through Zerodha Console that translates the raw trade history into the structured data required to complete Schedule CG (Capital Gains) and the business income schedules of Indian Income Tax Return forms. It is built on the same FIFO computation engine as the Tax P&L statement but is specifically designed to match the schedule-level input fields in ITR-2 (for salaried and capital gains taxpayers) and ITR-3 (for taxpayers with business or professional income, including F&O traders).

Tax treatment of listing-day gains

Mon, 11 May 2026 00:00:00 +0000

Listing-day gains are profits realised by investors who sell shares allotted in an initial public offering (IPO) on the very first day those shares are admitted to trading on a recognised stock exchange. The tax treatment of such gains is governed by Section 111A of the Income Tax Act 1961, which taxes short-term capital gains (STCG) on listed equity at a flat 20% (as revised by the Finance Act 2024), provided that Securities Transaction Tax (STT) has been paid on the sale.