capital gain

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 January 2010 one persone invest Rs. 2000 per month in systemetic investment plan. after the end of 5 year he wants to redeem the all unit which is alloted to him. so now how to calculate capital gain on that? how much short term and long term?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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02 January 2010 When you buy , the mutual fund allots you units and when you sell the mutual fund company call it redemption, which mean buyback from you on the NAV. So there may be gains or loss when you actually do the redemption. The capital Gains can be two types having two rates under I T Act. These are Long term Gains or Short Term Gains

Long Term Gains

If you held the units for more than a year, gains on such units redemption is tax free u/s 10(38) of the I T Act.

Short term gains

When the units are sold (redemption ) within one year of being held by the investor , it becomes short term gains or loss . The Short term gains are taxed @ 15 % u/s 111A of the I T Act.

The gains or loss is very easily computed as under

Redemption price paid by Mutual Fund Company xxxxxx

Less

Cost of acquisition of those units XXXXX

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