As a catchphrase, “Mutual Funds Sahi Hai” deserves much credit for the eightfold increase in total assets under management from ₹8.26 trillion in December 2013 to around ₹66.93 trillion in December 2024. But can the same be said for the taxation of financial assets like mutual funds—more specifically, can we say, “Capital gains tax sahi hai”? A look at the evolution of capital gains tax changes and their impact on the financialisation of savings.For starters, take equity mutual funds. From 1998 to 2018, equity mutual funds enjoyed an era of tax-exempt long-term capital gains, creating an opportunity to compound wealth for over 220 million Indians who use mutual funds as an alternative to traditional avenues like bank deposits, small savings, corporate deposits, physical gold, and real estate. The initial provision exempted long-term capital gains on equity mutual funds for a holding period of 12 months.
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