If you're not drawing a salary, your tax lens must match your investment lens.

A business owner once said:

Another asked:

The answer: mutual fund taxation doesn’t depend on how you earn—it depends on how long you invest and what kind of fund you choose.

But as a non-salaried individual, you do need to manage timing, capital gains, and cash flow planning a little more deliberately.

Let’s break it down.

Step 1: Classify Your Mutual Fund Type

Tax rules differ based on the type of fund:

This classification affects both rate and holding period.

Step 2: Understand the Tax Based on Holding Period

As a business owner or freelancer, your income is already variable—so these rates must be factored into withdrawal timing.

Step 3: How Gains Are Calculated

Gains = Sale price – Purchase price

Redemption is FIFO-based (first in, first out).

You pay tax only on the gain, not the full redemption amount.

Example:

• Invested ₹1 lakh in equity fund in Jan 2022

• Redeemed ₹1.3 lakh in Feb 2024

• Gain = ₹30,000 → Tax = 10% on ₹30,000 = ₹3,000 (if total gains exceed ₹1 lakh in the year)

Step 4: SWPs and Withdrawals—What Gets Taxed?

If you're using Systematic Withdrawal Plans (SWPs) for income:

• Each SWP is treated as a partial redemption

• Tax is applied only on the capital gains portion

• Debt fund SWPs → Gains added to income

• Equity fund SWPs → STCG (15%) or LTCG (10%) as per holding

This makes SWPs more tax-efficient than interest from FDs—especially for non-salaried people who want regular cash flow without pushing into higher slabs.

Step 5: How to Report and Pay Tax

• Capital gains from mutual funds go into Schedule CG of your ITR

• SWP gains and redemptions must be declared even if not credited as income

• No TDS is deducted by mutual funds (unless NRI), so you must self-assess and pay advance tax if required

💡 Track using capital gains statements from platforms like CAMS, KFinTech, or your broker.

Step 6: Smart Tips for Non-Salaried Investors

1. Use SWPs from equity funds after 12 months to benefit from lower LTCG rates

2. Time large redemptions in years where your business income is low (better tax slab)

3. Keep business and personal investments separate for clean audit and tax clarity

4. Use capital loss harvesting to offset gains, if applicable

5. Always factor tax liability into your quarterly advance tax planning

   
   

TL;DR – Too Long; Didn’t Read

• Mutual fund tax depends on fund type and holding period—not your profession.

• Equity: 15% STCG (<1 yr), 10% LTCG (>1 yr, on gains above ₹1L/year)

• Debt: Entire gain taxed at slab rate (no indexation after April 2023)

• SWPs are taxed only on gains, not full payout—more efficient than FD interest

• No TDS, so you must report and pay gains during ITR or advance tax cycles

You don’t need a salary to invest smartly.

But you do need a tax plan that respects how you earn—and when you redeem.

Because in non-salaried life, cash flow is king—but tax efficiency is your silent partner.