Mutual Fund Capital Gains Calculator

If I were to redeem an amount today from your mutual fund holding,

  • What would be the short term capital gain?
  • What would be the long term capital gain?
  • What is the tax corresponding to these gains?
  • what amount is free to be redeemed from an ELSS fund?
  • How would I lose due to exit load?

Here is a calculator that answers the above questions (updated for FY 2015-16). Use  it to compute short term and long term capital gains with associated tax from equity and non-equity mutual funds. This sheet is part of the automated mutual fund and financial goal tracker. I thought it might be a good idea tofirst post the capital gains module as a stand-alone sheet. This might help one in understanding the difficulties involved in computing short-term and long-term capital gains (STCG and LTCG) tax for mutual funds.

This also gives me a chance to implement your feedback on this sheet in the tracker.  Dr.G.M.Ajit who reviewed the fund/goal tracker was insistent that I include LTCG taxation with indexation.  Although I was initially reluctant, I decided to put it in, as it would prove helpful. I thank him for pushing me to include indexation. Here is what this sheet can do: Inputs:

  1. Latest NAV with date
  2. All transactions in that holding.  This is a bit of a pain as it would involve getting the since inception account statement, copying it onto a blank excel sheet and then to this sheet. Unfortunately not much can be done about this as all transactions are necessary to calculate LTCG/STCG (see below). In the automated tracker, naturally the user will be spared from this trouble.
  3. Redemption amount
  4. Lock-in period if any
  5. Type of fund: equity or non-equity (all debt funds, fund of funds, gold funds, ETFs, balanced funds with less than 65% equity are non-equity funds)
  6. Tax slab
  7. Exit load information: multiple durations and loads can be entered.
  8. All redemptions from equity funds are subject to a securities transaction tax 0.001%. I had earlier neglectedbut I chose to put it in following a suggestion by Narendra Kondajji who runs Procyon Financial Planners Pvt Ltd. He suggested that I keep all tax-rates as inputs so that future changes in tax-rules can be accomodated.

Output:

Taking into account the above input, the sheet will give the STCG and LTCG along with corresponding tax to be paid.

The sheet will calculate the age of mutual fund units corresponding to each purchase and apply lock-in, exit load and taxation information based on the unit-age.

Equity Funds (min 65% Indian equity)

Short term capital gains: Any gain made within or equal to one year of purchase.

STCG =  Sale price – purchase price

STCG is taxed at the rate of 15.45% for those with a net taxable income of less than Rs. 1 Crore

STCG is taxed at the rate of 16.995% for those with a net taxable income of more than Rs. 1 Crore

Thanks to Soubhagya Kumar Patra, co-founder, Succinct Financial Planners for pointing out the above distinction.

Long term capital gains:

Any gain made after one year of purchase is tax-free

Non-equity funds

Short term capital gains: Any gain made within or equal to 3 years of purchase.

STCG =  Sale price – purchase price

STCG is added to income and taxed as per slab

Long term capital gains:

Any gain made after 3 years of purchase for non-equity funds. This has to be computed with indexation.

Indexation means, I ask,

In the financial year of purchase the cost inflation index (CII) was 200 (say). Today, that is in the financial year of redemption the CII is 300 (say).  What is my purchase worth today?

This is given by (purchase price x 300)/200 = Indexed Purchase price

(same logic as elementary math: If five people eat 7 samosas, how many samosas will 13 people eat?!)

Therefore:

LTCG (without indexation) = Sale price (redemption value) - Purchase price (this is no longer available for debt mutual funds)

LTCG (with indexation) = Sale price - Indexed Purchase Price

With indexation, it is taxed at the rate of 20.6% (Thanks to Deepesh for pointing errors in this section).

Why input all transactions for calculating capital gains?

If I had made a single purchase a while back and seek to know capital gains if I redeem today, there is not much of a problem.

If I have a SIP running, I will be buying mutual fund units each month.

After a couple of years, some units will be subject to LTCG and some to STCG (depending on my redemption amount) owing to their different ages.

Some units will be subject to a lock-in (if applicable) and some free to be redeemed.

Some units will be subject to an exit load and some free from it. The exit load may differ among the units that will be subject to an exit load!

Some units subject to an exit load will be part of STCG and some part of LTCG!

If I have 1000 units, and want to redeem an amount worth 100 units (as per latest NAV), I will have to consider the first 100 units purchased.

That is redemption is on a first-in, first-out basis (FIFO). Therefore, everything hinges on the age of the units corresponding to each transaction.

When you try to compute LTCG with indexation, the financial year corresponding to each purchase and the cost inflation index also have to be considered.

Therefore, a mutual fund capital gains calculator should take into account all these factors!

This is what I have attempted to do in this sheet.

If you have only a handful of transactions (~ 25) to consider, you can use this sheet comfortably.

For more transactions, I suggest you wait for automated tracker.

In any case do use this sheet and let me know your feedback.

If you are interested in tax calculations and Excel, I request you to go through the computation cells and check the sheet.

Download the mutual fund capital gains calculator

Install Financial Freedom App! (Google Play Store)

Install Freefincal Retirement Planner App! (Google Play Store)

book-footer

Buy our New Book!

You Can Be Rich With Goal-based Investing A book by  P V Subramanyam (subramoney.com) & M Pattabiraman. Hard bound. Price: Rs. 399/- and Kindle Rs. 349/-. Read more about the book and pre-order now!
Practical advice + calculators for you to develop personalised investment solutions

Thank you for reading. You may also like

About Freefincal

Freefincal has open-source, comprehensive Excel spreadsheets, tools, analysis and unbiased, conflict of interest-free commentary on different aspects of personal finance and investing. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. We do not accept sponsored posts, links or guest posts request from content writers and agencies.

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete  the entire comment or remove the links before approving them.

43 thoughts on “Mutual Fund Capital Gains Calculator

  1. Pushkar

    Hi,

    While redemption of units, its like "first in first out" principle right ?

    eg
    1st Purchase 05 April of 10k
    2nd Purchase 15 April of 10k and
    3rd Purchase 05 May of 10k.

    Now if I sell 9.5k, its from my first purchase, but for 10.5k, its 1st or 2nd purchase ?

    Does this has any impact on tax calculations ? or it (taxation system) just considers 1st date of purchase ?

    Reply
    1. pattu

      Pushkar it works like this.
      1st Purchase 05 April of 10k = 1000 units
      2nd Purchase 15 April of 10k and =900 units
      3rd Purchase 05 May of 10k. 800 units.

      If I want to redeem 25K today, 25K/NAV = no of units. Say this is 2000

      So 1000 units from first purchase (first in) + 900 units from second purchase (second in ) + 100 units from third purchase (last in)

      will be chosen for redemption, exit load and tax purposes.

      Hope this answers your question.

      Reply
  2. Pushkar

    Hi,

    While redemption of units, its like "first in first out" principle right ?

    eg
    1st Purchase 05 April of 10k
    2nd Purchase 15 April of 10k and
    3rd Purchase 05 May of 10k.

    Now if I sell 9.5k, its from my first purchase, but for 10.5k, its 1st or 2nd purchase ?

    Does this has any impact on tax calculations ? or it (taxation system) just considers 1st date of purchase ?

    Reply
    1. pattu

      Pushkar it works like this.
      1st Purchase 05 April of 10k = 1000 units
      2nd Purchase 15 April of 10k and =900 units
      3rd Purchase 05 May of 10k. 800 units.

      If I want to redeem 25K today, 25K/NAV = no of units. Say this is 2000

      So 1000 units from first purchase (first in) + 900 units from second purchase (second in ) + 100 units from third purchase (last in)

      will be chosen for redemption, exit load and tax purposes.

      Hope this answers your question.

      Reply
  3. Ashish Gupta

    Value Research Portfolio tracker computes LTCG/STCG quite well. However, question that remains unanswered is how do I know which of my funds qualifies for "equity fund" and which is "other than equity"? Do I just go by VR classification label? What about balanced fund? How do I know if fund had 65%+ equity? As of which date?

    Reply
  4. Ashish Gupta

    Value Research Portfolio tracker computes LTCG/STCG quite well. However, question that remains unanswered is how do I know which of my funds qualifies for "equity fund" and which is "other than equity"? Do I just go by VR classification label? What about balanced fund? How do I know if fund had 65%+ equity? As of which date?

    Reply
  5. Tara Rak

    Can you add the Loss calculations to the above concepts. For example, how does STCL and LTCL reflect on the above calculation?
    If I have a Non-Equity fund (Debt fund) and it shows a LTCG without indexation, but a LTCL with indexation, then, can I choose to go "with indexation calculation" for tax purposes? Because, I would pay some tax @ 11.33% without indexation on LTCG, but if I show it with indexation and results in a LTCL, then I need not pay any tax???

    Reply
  6. Tara Rak

    Can you add the Loss calculations to the above concepts. For example, how does STCL and LTCL reflect on the above calculation?
    If I have a Non-Equity fund (Debt fund) and it shows a LTCG without indexation, but a LTCL with indexation, then, can I choose to go "with indexation calculation" for tax purposes? Because, I would pay some tax @ 11.33% without indexation on LTCG, but if I show it with indexation and results in a LTCL, then I need not pay any tax???

    Reply
  7. Ramamurthy

    Suppose I have a Short tern Capital Gain from Debt Fund(.<than 3Years) Rs 50000and a short term Capital loss of Rs 30000 from equity funds.No other Cap Gain or loss.Can I adjust 50000 against 30000 and pay tax on 20000 at normal rate?or Pay Tax on 50000 at normal rates and carry forward loss of 30000 for 8 Years?

    Reply
  8. Ramamurthy

    Suppose I have a Short tern Capital Gain from Debt Fund(.<than 3Years) Rs 50000and a short term Capital loss of Rs 30000 from equity funds.No other Cap Gain or loss.Can I adjust 50000 against 30000 and pay tax on 20000 at normal rate?or Pay Tax on 50000 at normal rates and carry forward loss of 30000 for 8 Years?

    Reply
  9. Deepesh

    Hi Pattu,
    Very helpful as always.
    As I understand, LTCG (without indexation) has been done away with for debt funds. LTCG (with indexation) is the only one that remains.
    Secondly, LTCG of 22.6% (with indexation) will be only for investors with net taxable income of over Rs 1 crores. For others, it should be 20.6% with indexation.

    Reply
    1. freefincal

      Thank you. The article reflects the removal of with indexation option. Thanks for pointing the error in the with indexation tax rate. Changed that to 20.6%. Not able to find a source which says the LTCG rate depends on taxable income. Can you point me to one? Thanks.

      Reply
      1. Deepesh

        LTCG rate is same for everyone. The difference is because of surcharge, which is applicable if the taxable income exceeds 1 crore. So 20%+ (10% surcharge and cess as applicable)= 22.6%

        Reply
  10. Deepesh

    Hi Pattu,
    Very helpful as always.
    As I understand, LTCG (without indexation) has been done away with for debt funds. LTCG (with indexation) is the only one that remains.
    Secondly, LTCG of 22.6% (with indexation) will be only for investors with net taxable income of over Rs 1 crores. For others, it should be 20.6% with indexation.

    Reply
    1. freefincal

      Thank you. The article reflects the removal of with indexation option. Thanks for pointing the error in the with indexation tax rate. Changed that to 20.6%. Not able to find a source which says the LTCG rate depends on taxable income. Can you point me to one? Thanks.

      Reply
      1. Deepesh

        LTCG rate is same for everyone. The difference is because of surcharge, which is applicable if the taxable income exceeds 1 crore. So 20%+ (10% surcharge and cess as applicable)= 22.6%

        Reply
  11. Deepesh

    Hi Pattu,

    Your post on revision in DDT post change in tax surcharge got me thinking.
    Surcharge has been increased from 10% to 12% in the last budget.
    Since the surcharge has been increased to 12@, STCG on equity funds for investors with next taxable income of over Rs 1 crore will become 17.34% (15% +12% surcharge +3% cess).
    Or I missed out something? I am no tax expert.

    Reply
  12. Deepesh

    Hi Pattu,

    Your post on revision in DDT post change in tax surcharge got me thinking.
    Surcharge has been increased from 10% to 12% in the last budget.
    Since the surcharge has been increased to 12@, STCG on equity funds for investors with next taxable income of over Rs 1 crore will become 17.34% (15% +12% surcharge +3% cess).
    Or I missed out something? I am no tax expert.

    Reply
  13. Madhava Ram

    I tried to use this sheet and input my values of all purchases. Below are the steps I followed. Correct me If I am wrong.

    Input Current NAV in B5 and Current Nav Date is automatically populated I think. Redemption Amount required(Column B7 I want to sell everything, so I put the total value with what ever I have now in my present account).

    Filled Dates from the date when I started purchased, in between I changed it to Redemption under purchase column.

    Question 1. When we enter redemption, in the amount column should we have a (-) prefix to the amount or not?
    Question 2. Should we make an entry of the total redemption at the end as well, I mean to ask as say for example, I have been investing and corpus has become say 5,00,000 and my redemption value in B7 is 5,00,000 and Do i need to input the same in the account statement as well?
    Question 3: In Captial Gains sheet, I need to look in the column E14, to see if I have to pay any taxes.

    Reply
    1. freefincal

      NAV will not get populated automatically! Please enter it yourself.
      Question 1. No need to put it as negative
      Question 2. The final entry in the account statement has to be included.
      Question 3. Yes.
      NOTE: Please verify these results with the capitial gains statement offered by AMCs

      Reply
  14. Madhava Ram

    I tried to use this sheet and input my values of all purchases. Below are the steps I followed. Correct me If I am wrong.

    Input Current NAV in B5 and Current Nav Date is automatically populated I think. Redemption Amount required(Column B7 I want to sell everything, so I put the total value with what ever I have now in my present account).

    Filled Dates from the date when I started purchased, in between I changed it to Redemption under purchase column.

    Question 1. When we enter redemption, in the amount column should we have a (-) prefix to the amount or not?
    Question 2. Should we make an entry of the total redemption at the end as well, I mean to ask as say for example, I have been investing and corpus has become say 5,00,000 and my redemption value in B7 is 5,00,000 and Do i need to input the same in the account statement as well?
    Question 3: In Captial Gains sheet, I need to look in the column E14, to see if I have to pay any taxes.

    Reply
    1. freefincal

      NAV will not get populated automatically! Please enter it yourself.
      Question 1. No need to put it as negative
      Question 2. The final entry in the account statement has to be included.
      Question 3. Yes.
      NOTE: Please verify these results with the capitial gains statement offered by AMCs

      Reply
  15. Pingback: 2012 Real Estate Capital Gains Calculator – mikileak.info

Do let us know what you think about the article