Q: While reading articles about mutual funds, I often come across the terms ‘realised gains’ and ‘unrealised gains.’ What do they mean and how are they different? Further, why does it matter whether gains are realised or unrealised?
V. Mangala
A At first glance, the terms ‘realised gains’ and ‘unrealised gains’ may sound like financial jargon. But the difference between the two is actually quite simple and straightforward. It all boils down to whether your profits are still on paper or have been booked and safely transferred to your bank account.
Say, for instance, you purchased mutual fund units at ₹100 each, and the current Net Asset Value (NAV) has risen to ₹120. This means your investment has grown, but since you haven’t sold the units, the profit is only notional. In other words, the profit exists only in theory; it’s visible on your broker’s app but not yet credited or transferred to your wallet. These are called unrealised gains.
Now, the moment you sell your mutual fund units, the profit that existed on the paper becomes a realised gain.
In the above example, if you sell at ₹120, that extra ₹20 per unit is the actual gain that would be credited to your account.
Realised profits are the actual, booked/locked-in gains, whereas unrealised profits have profit potential, but later, it might grow or shrink depending upon market fluctuations.
You can even lose unrealised profits if they are not booked in time. In short, unrealised gains are like a profit promised, while the realised gains are the same promise delivered and fulfilled.
Whether the profit is realised or unrealised matters because taxes are levied only on the realised gains and not on the tax-free unrealised ones.
Further, the unrealised gains might appear impressive but in reality, can shrink or disappear owing to market volatility. If the gains are realised, the amount is actually credited to your bank account and you can reinvest the same, rebalance it or spend it, based on your choice. If you book too early, you will lose the power of compounding and if you wait too long, you may be left with just paper profits.
Therefore, for investors, the real challenge lies in finding the right balance between the two choices.
Q The Government of India has announced GST 2.0 reforms. Will this new GST reduce the pink tax? The majority of Indians know about GST, but there is less awareness about the pink tax. Why?
Also, is it legal in India? Kerala has the highest female population, so the pink tax is more prevalent there. Does the State or the rural female population know about this tax? It seems like an economic assumption and not many are aware of it. Why?
Adwaith
A Rest assured that there is no such official tax called the ‘Pink Tax’ levied by the Government of India.
Unlike the GST or the Income Tax, the Pink Tax is not a government-imposed fee and therefore not payable to the Union Government or the respective State Governments. So, the question of GST 2.0 reducing the ‘Pink Tax’ simply does not arise.
Not just in Kerala, but nowhere in India is there a government-backed tax that targets/burdens women in this way. The term ‘Pink Tax’ is actually a metaphor.
It refers to a pricing phenomenon wherein women often end up paying more for products marketed specifically to them. Say for instance, pink toys, women’s shampoos, deodorants etc.
The lack of awareness exists mainly because the Pink Tax is not a “real” tax, it’s not collected by the government and there are no bills in the name of Pink Tax. It is not an economic assumption but a silent practice by companies, a marketing strategy, which exploits consumer psychology.
The good news is that with a little awareness, consumers can often sidestep this extra cost.
(The writer is an NISM & CRISIL-certified Wealth Manager and certified in NISM’s Research Analyst module)
Published – September 22, 2025 06:47 am IST
