Till March 2018, equity funds did not attract any long term capital gains (LTCG) tax in the hands of the investor. Therefore, the question of indexation did not arise at all. However, Budget 2018 introduced a flat tax rate of 10% on equity gains on mutual funds where such gains were booked after April 01st 2018. However, this is a flat tax without the benefit of indexation irrespective of the holding period. This is only applicable to LTCG since the STCG is still taxed at 15%. However, the budget also explicitly stated that the tax on equity funds LTCG will be a flat and therefore shall not offer the benefit of indexation. This points needs to be remembered since the cost of indexation formula will not apply to LTCG on equity funds although you will have to pay tax on 10%. However, in lieu of the benefit of indexation, the IT Act has given a flat exemption of Rs.1 lakh each financial year on LTCG on equity and equity funds. This is an overall blanket limit.