What is the LTCG rate on equity SIFs?

12.5% on long-term capital gains above ₹1.25 lakh per financial year, for equity-oriented SIFs (≥65% equity). The threshold is shared across all equity LTCG (mutual funds + SIFs + listed shares). Holding period must be at least 12 months from unit allotment to qualify as long-term.

What is the STCG rate on equity SIFs?

20% flat on the entire short-term capital gain — no exemption threshold. Applies to equity SIF redemptions where the holding period is less than 12 months. The rate was hiked from 15% to 20% in the July 2024 Union Budget.

What if my equity SIF holds less than 65% equity at redemption?

The 65% equity threshold is checked on a rolling-average basis as per SEBI's mutual fund classification rules — not at any single moment. If the SIF is classified as equity-oriented per SEBI guidelines (most Equity Long-Short SIFs are), equity tax rates apply regardless of momentary deviations. Check the latest factsheet to confirm.

How is LTCG calculated on SIF SIPs?

Each SIP installment is treated as a separate purchase with its own holding-period clock. So if you SIP into a SIF for 18 months and redeem at month 18, only the first 6 installments qualify as long-term; the remaining 12 are short-term. FIFO (first-in-first-out) applies to redemption ordering by default.

SIF LTCG vs STCG — Long-Term and Short-Term Capital Gains Tax India

SIF LTCG vs STCG: The Complete Tax Comparison

Long-term vs short-term capital gains on Specialized Investment Funds in India — rates, thresholds, holding periods, and the edge cases that catch HNI investors out.

The two regimes side by side

Aspect	LTCG (Long-Term)	STCG (Short-Term)
Holding period	≥ 12 months	< 12 months
Rate (equity SIF)	12.5% above ₹1.25L	20% flat
Rate (hybrid <65%, debt, AAA)	Slab rate	Slab rate
Annual exemption	₹1.25 lakh (equity)	None
Indexation	Removed (Apr 2023)	Never available

Worked example: ₹10 lakh invested in qSIF Equity

Suppose you invested ₹10 lakh in qSIF Equity Long-Short on 8 October 2025 and redeem on 1 November 2026 at a 30% gain (₹13 lakh). Holding period is 13 months — qualifies for LTCG.

Total gain: ₹3,00,000
LTCG exemption: ₹1,25,000
Taxable LTCG: ₹1,75,000
Tax @ 12.5%: ₹21,875
Effective tax rate on full gain: 7.29%
Net post-tax return: ₹12,78,125 → 27.81% net

Worked example: same fund, redeemed at 11 months

Same investment, same gain, but redeemed at month 11 instead of month 13. Now it's STCG.

Total gain: ₹3,00,000
STCG exemption: ₹0
Tax @ 20%: ₹60,000
Effective tax rate on full gain: 20%
Net post-tax return: ₹12,40,000 → 24% net

Cost of redeeming 1 month early: ₹38,125 in extra tax — roughly 4 percentage points of net return on a ₹10 lakh investment. For a ₹1 crore SIF holding, the same 1-month early redemption would cost ₹3.81 lakh.

When STCG is actually optimal

In one specific scenario, accepting STCG can be the right call: when your fund is up significantly and you have offsetting STCG losses elsewhere. Capital losses can be set off against capital gains of the same type — STCG losses against STCG gains, LTCG losses against LTCG gains. If you're sitting on substantial STCG losses that would otherwise expire, harvesting an STCG SIF gain to absorb them is mathematically rational.

For everything else: hold for at least 12 months. The maths almost always favours waiting.

Frequently asked questions

What is the LTCG rate on equity SIFs?: 12.5% on long-term capital gains above ₹1.25 lakh per financial year, for equity-oriented SIFs (≥65% equity). The threshold is shared across all equity LTCG (mutual funds + SIFs + listed shares). Holding period must be at least 12 months from unit allotment to qualify as long-term.
What is the STCG rate on equity SIFs?: 20% flat on the entire short-term capital gain — no exemption threshold. Applies to equity SIF redemptions where the holding period is less than 12 months. The rate was hiked from 15% to 20% in the July 2024 Union Budget.
What if my equity SIF holds less than 65% equity at redemption?: The 65% equity threshold is checked on a rolling-average basis as per SEBI's mutual fund classification rules — not at any single moment. If the SIF is classified as equity-oriented per SEBI guidelines (most Equity Long-Short SIFs are), equity tax rates apply regardless of momentary deviations. Check the latest factsheet to confirm.
How is LTCG calculated on SIF SIPs?: Each SIP installment is treated as a separate purchase with its own holding-period clock. So if you SIP into a SIF for 18 months and redeem at month 18, only the first 6 installments qualify as long-term; the remaining 12 are short-term. FIFO (first-in-first-out) applies to redemption ordering by default.