Mutual Fund

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Prateek Biyani (Querist)
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20 January 2011 What is the cost of Bonus units received in Bonus Plan of any Mutual Fund. Is it Nil or the NAV as on the date of declaration of Bonus ? Please give answer with reference to the relevant section(s).

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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20 January 2011 Section 94(8) Where—
(a) any person buys or acquires any units within a period of three months prior to the record date;
(b) such person is allotted additional units without any payment on the basis of holding of such units on such date;
(c) such person sells or transfers all or any of the units referred to in clause (a) within a period of nine months after such date, while continuing to hold all or any of the additional units referred to in clause (b),
then, the loss, if any, arising to him on account of such purchase and sale of all or any of such units shall be ignored for the purposes of computing his income chargeable to tax and notwithstanding anything contained in any other provision of this Act, the amount of loss so ignored shall be deemed to be the cost of purchase or acquisition of such additional units referred to in clause (b) as are held by him on the date of such sale or transfer.]

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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20 January 2011 So... if 10 units are received on the base of 100 units, then any loss (to be ignored) under section 94(8)on such 100 units, will be considered as the cost of acquisition for such additional bonus units.

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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24 February 2011 I hope you don't need further clarification

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