Debt Fund Tax Calculator — Section 50AA (India, FY 2026-27)
Tax on debt mutual fund gains under Section 50AA (post 1 April 2023) and the legacy LTCG/STCG regime with CII indexation for pre-April-2023 holdings. Handles both cases automatically based on purchase date.
Last updated: Reviewed by MoneyKit EditorialMethodology
Transaction details
Tax breakdown
- Regime applied
- Section 50AA — slab rate
- Holding period
- 821 days (2.2 years)
- Raw gain (sale − cost)
- ₹1,00,000
- Taxable gain
- ₹1,00,000
- Tax rate
- 30%
- Tax (ex cess + surcharge)
- ₹30,000
- Section 50AA applies (debt MF purchased on/after 1 April 2023).
- Gain taxed at your slab rate of 30% — no indexation, no STCG/LTCG distinction.
Notes
Section 50AA — frequently asked questions
What changed for debt mutual fund taxation after 1 April 2023?
Section 50AA of the Income-tax Act (introduced by Finance Act 2023) removed the LTCG/STCG distinction for "specified mutual funds" — those investing less than 35% in Indian equity. From 1 April 2023 onwards, all gains on debt MF units are taxed at your slab rate, regardless of holding period. No more 20%-with-indexation LTCG benefit.
Does Section 50AA apply to units I already held before 1 April 2023?
No. Section 50AA applies only to units purchased on or after 1 April 2023. For pre-cutoff units, the old regime still applies: holding < 36 months = STCG at slab rate; holding ≥ 36 months = LTCG at 20% with CII indexation.
Which funds count as "specified" under Section 50AA?
Mutual funds where 35% or less of total proceeds are invested in Indian equity shares. This covers: gilt, liquid, overnight, ultra-short, short-duration, corporate-bond, credit-risk, banking & PSU, floater, dynamic-bond, gilt-with-10-yr-constant-duration, money-market, and most arbitrage funds. Hybrid funds with 35-65% equity exposure have a separate regime introduced in Budget 2024.
Can I offset debt fund losses against other capital gains?
Losses on Section 50AA debt fund units are treated as short-term capital losses (STCL) and can be set off against STCG or LTCG from any asset in the same year, or carried forward 8 years. Losses on pre-50AA LTCG units follow the old rules (LTCL offsets LTCG only).
How does CII indexation work for pre-50AA LTCG?
Indexed cost = original cost × (CII of sale year / CII of acquisition year). FY 2001-02 is the base (CII = 100). FY 2024-25 CII = 363; FY 2025-26 = 376; FY 2026-27 projected at 391. The CBDT notifies the annual CII in May. Indexation effectively adjusts your purchase cost for inflation, reducing the taxable long-term gain.