TaxSavvy

Tax planning

Debt mutual fund and specified mutual fund gains, Sec 76 (old 50AA)

  • Debt fund units bought on or after 1 April 2023 are always taxed as short-term gains at your slab rate, however long you hold them.
  • Deadline: With the ITR: AY 2026-27 due date 31 July 2026 for ITR-2 (non-audit). Advance tax in the quarter of redemption.
  • Done in 1 working day after the CAMS or KFintech statement
  • Prepared by your Savvy, checked by a CA
  1. CAMS or KFintech capital gains statement
  2. When were the units bought
  3. Download consolidated capital gains statement for the financial year
  4. Lot-wise debt fund gains working
The law and the stepsPay and start · ₹999Yearly, + 18% GST

Answer in brief

Debt fund units bought on or after 1 April 2023 are always taxed as short-term gains at your slab rate, however long you hold them. Units bought before that date are long term after 24 months and taxed at 12.5%. We read your mutual fund statement, test each fund and purchase date, and report the right figure.

Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.

From the official sources

What the law says, and what trips people up

From the official portal's manuals and FAQs, with the source for each point.

The law

  • Income-tax Act 1961, Sec 50AA(a) (now Sec 76)

    Gain on units of a Specified Mutual Fund acquired on or after 1 April 2023, or on a market linked debenture, is deemed short-term, whatever the holding periodSource

  • Income-tax Act 1961, Sec 50AA (now Sec 76) computation

    Gain = redemption or sale value minus cost minus transfer expenses; no indexation; no deduction for STTSource

  • Income-tax Act 1961, Sec 50AA (now Sec 76) Explanation (Specified Mutual Fund)

    A fund investing more than 65% of its total proceeds in debt and money market instruments, or a fund investing 65% or more in such funds, measured on the annual average of daily closing figuresSource

  • Specified Mutual Fund definition, effective date

    AMC reckoner states the 65% debt test applies from 1 April 2025 (earlier test was equity of not more than 35%)Source

  • Income-tax Act 1961, Sec 2(42A) and Sec 112 (now Sec 2(101) and 197)

    Units not covered by Sec 76 (old Sec 50AA; bought before 1 April 2023) are long term after 24 months (12 months if listed) and taxed at 12.5% without indexation for transfers on or after 23 July 2024Source

  • AMC tax reckoner FY 2025-26

    Units bought before 1 April 2023: long term after 24 months (12 months for listed units), 12.5%Source

  • Income-tax Act 2025, Sec 76

    From tax year 2026-27, the same rule continues as Sec 76, overriding Sec 2(101) (holding period) and Sec 72 (computation)Source

  • Income-tax Act 1961, Sec 47(xviii) (now Sec 70) and (xix)

    Switch on consolidation of two schemes, or of plans within a scheme, is not a transfer; an ordinary switch between funds is a transferSource

  • Government fee

    No government fee. Short-term gain is added to total income and taxed at slab rates; long-term gain on pre-April 2023 units at 12.5% plus surcharge and cess. Source: https://incometaxindia.gov.in/Tutorials/15-%20LTCG.pdf

  • Late fee or penalty

    Sec 428 (old Sec 234F) fee of ₹5,000 (₹1,000 if total income does not exceed ₹5 lakh) for a return after the due date. Source: https://www.incometaxindia.gov.in/w/section-234f . Loss carry forward lost on a belated return (Sec 121, old Sec 80). Source: https://www.incometaxindia.gov.in/w/section-80-7

On the portal

  1. Log in to the e-Filing portal and download AIS to see mutual fund redemptions
  2. e-File > Income Tax Returns > File Income Tax Return > AY 2026-27 > Online > ITR-2
  3. In Schedule CG, enter Sec 50AA units under short-term gains (not under Sec 111A)
  4. Enter pre-April 2023 units held over 24 months under long-term gains at the 12.5% rate row
  5. Complete loss schedules, check Part B-TTI, pay, and e-verify

What trips people up

  • Debt units bought in 2023 or later reported as long term because held over 2 years

    Sec 50AA deems them short term; report at slab rateSource

  • Investor assumes all pre-April 2023 debt units are at 12.5% now

    Only lots held over 24 months are long term; check each lot's dateSource

  • Indexation claimed on debt fund sold after 23 July 2024

    No indexation for transfers on or after 23 July 2024Source

  • Hybrid or gold fund treated as specified MF

    Apply the over-65%-debt test; other funds follow the 24-month rule and 12.5%Source

People ask

I bought a debt fund in 2022 and sold in 2026. What rate?

Held over 24 months and bought before 1 April 2023, so long-term at 12.5% without indexation.Source

Is a liquid fund covered?

Yes, if it invests more than 65% in debt and money market instruments, which liquid funds do.Source

Does the new Income-tax Act change this from April 2026?

No. The rule continues as Sec 76 of the 2025 Act with the same dates and definition.Source

Is switching from regular to direct plan taxable?

Only consolidation of plans or schemes is exempt under Sec 47(xviii) and (xix); a normal switch is a redemption.Source

IDFD

How we solve it: 4 steps

Every line tracked live.

Step 1 of 4 · What we need from you

Tap each one you already have

Ready0 / 5
  • CAMS or KFintech capital gains statement
  • Scheme category of each fund
  • Switch and STP transactions list
  • AIS mutual fund entries
  • Brought forward capital lossesOptional

Connect now

A Savvy replies in minutes.

Fixed price before you pay. Your Savvy is paid only after you accept the work.

Connect nowPay and start: ₹999

Answers on this topic

Ask any money problem

Pay and start

₹999

₹999 + ₹179.82 GST = ₹1,178.82

Yearly. Delivered in 1 working day after the CAMS or KFintech statement. Due: With the ITR: AY 2026-27 due date 31 July 2026 for ITR-2 (non-audit). Advance tax in the quarter of redemption.

  • Every paid answer checked by a CA
  • Fixed price before you pay
  • Track every step live
  • Updates on WhatsApp and in your dashboard