Large Cap Mutual Funds

Large cap funds are open-ended equity schemes that predominantly invest in large-cap stocks. As per SEBI's categorisation, these schemes must invest a minimum of 80% of their total assets in equity and equity-related instruments of large-cap companies.

For mutual fund classification, large-cap companies are defined as companies ranked 1st to 100th by full market capitalisation. The remaining portion of a Large Cap Fund's portfolio may be invested in permitted securities and instruments, subject to applicable SEBI regulations and the scheme's stated asset allocation. 

According to the fund scheme, large-cap mutual funds invest their assets in stocks and other equity instruments associated with large-cap companies. A fund manager diversifies the pooled money among various sectors and industries. They manage the portfolio and review the companies regularly. Under SEBI regulations, at least 80% of the fund's assets must remain invested in large-cap companies. The remaining portion can be invested in other equities, debt instruments and money market instruments, subject to regulatory limits.

Investors can invest in mid-cap mutual funds conveniently through Paisabazaar by following these steps:

• 1. Log in to the Paisabazaar platform.
• 2. Navigate to the investment section and select "Mutual Funds".
• 3. Explore the available mid-cap fund schemes or search for a specific scheme.
• 4. Select the preferred investment route, such as a lump sum amount or a Systematic Investment Plan (SIP).
• 5. Complete the mandatory KYC process to proceed with the investment.

Large Cap Funds fall under the equity-oriented mutual fund category for tax purposes, subject to satisfying the applicable conditions under the Income Tax Act. AMFI's tax guidance states that gains from equity-oriented fund units are subject to the capital gains provisions applicable to such funds.

Short-Term Capital Gains (STCG)

If units of an equity-oriented mutual fund are held for 12 months or less, the gains on redemption are generally treated as short-term capital gains. For transfers/redemptions on or after 23 July 2024, STCG on equity-oriented fund units, where the applicable conditions are met, is taxed at 20%, plus applicable surcharge and 4% Health and Education Cess.

Long-Term Capital Gains (LTCG)

If the units are held for more than 12 months, the gains are generally treated as long-term capital gains. For transfers/redemptions on or after 23 July 2024, LTCG on equity-oriented mutual funds is taxed at 12.5% on aggregate gains exceeding ₹1.25 lakh in a financial year, subject to applicable conditions, surcharge and cess.