STCG Mutual Funds: What You Need to Know About Short-Term Capital Gains in India

When you sell STCG mutual funds, short-term capital gains from mutual fund units held for less than 12 months in equity funds or less than 36 months in debt funds. Also known as short-term gains, these are taxed differently based on the type of fund you own. If you bought an equity mutual fund last June and sold it this May, you’re looking at STCG. It’s not just about profit—it’s about how much of that profit the government takes before it hits your bank account.

The real difference shows up when you compare equity mutual funds, funds that invest at least 65% in Indian stocks versus debt mutual funds, funds that hold bonds, treasury bills, or other fixed-income assets. For equity funds, STCG is taxed at a flat 15%, no matter your income slab. For debt funds, STCG gets added to your total income and taxed at your personal rate—could be 10%, 20%, or even 30%. That’s why switching from a debt fund to an equity fund mid-year isn’t just a fund change—it’s a tax strategy.

Many people assume all mutual fund gains are treated the same. They’re not. A ₹50,000 gain in an ELSS fund held for 11 months gets taxed at 15%—that’s ₹7,500. The same gain in a liquid fund held for 11 months? Could be ₹15,000 or more, depending on your tax bracket. And here’s the catch: if you’re using SIPs, each installment has its own holding period. Selling after a year? You’re only taxed on the units held less than 12 months. The rest? Tax-free. That’s why timing matters more than you think.

What you’ll find in the posts below isn’t theory—it’s real, actionable info from people who’ve been through it. You’ll see how to calculate STCG on your own holdings, how to avoid overpaying by using direct plans, why switching between schemes can trigger unexpected taxes, and how expense ratios eat into your net returns even before the taxman gets involved. There’s also advice on when to hold and when to sell, how to use SWPs to manage cash flow without triggering STCG, and how to compare funds so your gains last longer than your tax bill.