Taking care of tax reporting for mutual funds you buy online is a crucial component of investment management. Even though mutual funds can contribute to wealth growth, it's critical to appropriately disclose them to abide by tax laws and prevent penalties. You can handle tax reporting for your online mutual fund investments in the following ways:

Recognize the various types of gains.
Mutual fund sales generate either long-term (LTCG) or short-term (STCG) profits or gains.

Equity mutual funds: We classify gains on investments held for less than a year as STCG, subject to 15% taxation. LTCG applies to funds held for more than a year, and gains over ₹1 lakh are subject to 10% tax.
Debt mutual funds: Gains are subject to STCG and income slab-specific taxation. If LTCG is held for more than 36 months after applying for indexation benefits, it is subject to a 20% tax.

Acquire the Statement of Capital Gains.
A capital gains statement, which lists your gains and losses from selling mutual funds, is available on the majority of mutual fund websites and apps. You must submit this statement to file your taxes. To report your taxable gains, log into your online mutual fund account or platform, obtain the capital gains statement for the applicable fiscal year, and then use it.

Determine your profits.
Based on the length of your holding period, classify your gains as either short-term or long-term using the capital gains statement. Determine the total gains or losses for each category. Recall that you can reduce your total taxable income by offsetting any losses against any gains in the same category.

Include the Profits in Your ITR
Declare your capital gains in the relevant sections of your income tax return (ITR):

The reporting category for STCG is "Short-Term Capital Gains."
The "Long-Term Capital Gains" section is where you report LTCG. In these sections, make sure to accurately enter the information from your capital gains statement. You have up to eight years to carry forward capital losses to offset future gains.

Remit the relevant taxes.
Make sure to pay any taxes owed on your mutual funds gains once you've declared them in your ITR. To avoid paying taxes twice, ensure that your file reflects any advance payments or tax deducted at source (TDS).

Precise tax reporting of your mutual fund holdings ensures compliance with regulations and helps to mitigate fines. You can easily manage your tax liabilities by comprehending capital gains, using the capital gains statement, and reporting them accurately.