🧮 How to Calculate Gains on Sale of Equity Mutual Funds: A Complete Guide
By Niveshnama Financial Analyst Desk | Updated August 2025
📘 Introduction
Equity Mutual Funds have helped millions of Indian investors build long-term wealth. But when it's time to sell, one crucial financial skill is often overlooked:
How do you calculate your gains—and how much tax will you pay?
This guide walks you through everything: gain formulas, tax rules, SIPs, real examples, and more!
📌 What Is an Equity Mutual Fund?
Equity Mutual Funds invest at least 65% in equity shares. Their aim is capital appreciation over time, and the NAV (Net Asset Value) fluctuates based on market performance.
📊 Types of Capital Gains
| Holding Period | Type | Tax Rate | Exemption |
|---|---|---|---|
| Less than 12 months | STCG | 15% | None |
| More than 12 months | LTCG | 10% | ₹1 lakh/year |
🔢 Steps to Calculate Capital Gains
1. Identify Units and NAVs
Example: Bought 100 units at ₹50 → Sold at ₹75
2. Use the Formula
Capital Gain = (Sell NAV × Units) – (Buy NAV × Units)
3. Determine Holding Period
If > 12 months → LTCG | If < 12 months → STCG
🧾 Real-Life Example: LTCG
| Units Bought | 500 |
| Purchase NAV | ₹40 |
| Sale NAV (after 2.5 years) | ₹85 |
| Capital Gain | ₹22,500 |
| LTCG Tax | ₹0 (below ₹1L exemption) |
🧠 Key Features
- FIFO Method used for SIP units
- No indexation benefit for equity funds
- STT (Securities Transaction Tax) already deducted
- All fund expenses adjusted in NAV
📅 SIP Redemption Example
| SIP Date | Units | Buy NAV | Sell Date | Sell NAV | Gain Type |
|---|---|---|---|---|---|
| Jan 2023 | 100 | ₹50 | Feb 2025 | ₹90 | LTCG |
| Jan 2024 | 100 | ₹60 | Feb 2025 | ₹90 | STCG |
📊 Capital Gain Flow Chart
BUY NAV & UNITS → HOLDING PERIOD → SALE NAV & UNITS
↓ ↓ ↓
Calculate Gain → STCG or LTCG → Apply Tax Rule
🏦 Where to Check NAV & History?
- AMC websites or apps
- CAMS or KFintech statements
- NSDL/CDSL CAS (Consolidated Account Statement)
🚨 Common Mistakes to Avoid
- Not maintaining SIP-wise records
- Misunderstanding LTCG exemption limits
- Redeeming bulk units without tax planning
- Not checking for exit load (if any)
🧩 Expert Tips
- Book LTCG up to ₹1 lakh annually to stay tax-free.
- Track SIP-wise gain using Excel or online tools.
- Use redemptions strategically across financial years.
📌 Final Summary Table
| Step | What to Do |
|---|---|
| Track Buy/Sell NAV | Via statements or apps |
| Note Holding Period | STCG < 12m, LTCG > 12m |
| Use Gain Formula | (Sell - Buy) × Units |
| Apply Tax Rule | LTCG ₹1L free, STCG 15% |
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