How Short-Term Capital Gains Work in Debt Mutual Funds
Understanding taxation is a key part of investing, especially for those who are just beginning their journey. One area that often causes confusion is how short-term capital gains are calculated and taxed on debt mutual fund investments. Since these rules differ from equity mutual funds, it is important for investors to know how their profits are classified and taxed. This guide explains the topic clearly, using only the information needed to support better decision-making. What Are Debt Mutual Funds A debt mutual fund is a type of mutual fund that invests mainly in fixed-income instruments. These include government securities, treasury bills, corporate bonds, debentures, and money-market instruments. The objective of these funds is to generate income from interest and also from changes in the prices of these securities when interest rates move. Debt mutual funds are commonly chosen by investors who are looking for relatively stable returns, income generation, or capital preserva...