Old Debt Mutual Funds: Your Gains Still Taxed as LTCG at 12.5% After Rule Changes

• Tax rules for debt mutual funds changed significantly with Finance Acts 2023 and 2024.
• Investments made in debt mutual funds before April 1, 2023, are still treated as Long-Term Capital Gains (LTCG).
• LTCG on these older investments is taxed at 12.5% (plus cess and surcharge), with indexation benefit.
• For investments made after April 1, 2023, gains are treated as Short-Term Capital Gains (STCG) and taxed at income slab rates, regardless of holding period.
• The Section 87A rebate is not applicable to LTCG taxed at special rates like 12.5%.

Why It Matters: Pre-April 2023 debt mutual fund investments retain LTCG status, taxed at 12.5% with indexation.