Short term capital gains (STCG) on debt funds are added back to your income and taxed at your peak rate of tax which could be 20% or 30% as the case may be. It depends on the income slab you are in and you will accordingly be taxed with the impact of surcharge if applicable and cess for sure. Here STCG on debt funds is that which is held for less than 3 years. Long-term capital gains on debt fund (held for more than 3 years) are taxed at the rate of 20% after indexation. Indexation is a method of factoring in the rise in inflation between the year when the debt fund units were bought and the year when they are sold. The table below clearly captures how the various aspects of debt fund taxation are built into your taxation.

Particulars

Individuals / HUF

Domestic Companies

NRIs

Debt Oriented Schemes

ยท Long Term > 36 months | Short Term < 36 months

Long Term Capital Gains (LTCG)

20% with indexation

20% with indexation

20% with indexation for listed and 10% for unlisted stocks

Short Term Capital Gains (STCG)

30%

30%

30%