Tax implications on sale of mutual funds

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This query is : Resolved

CA Vivek Dugar (Querist)

13 June 2014 Dear Experts
Please tell the tax implications in case of sale of mutual funds which is under daily dividend reinvestment plan and sale is done within 12months of purchases?

Will there be any short term profit, as the difference in sale and purchase price is the dividend earned during the holding? [NAV is same during the whole period of holding]
Or
The difference will be shown in exempt income under the head "Income form other sources" as dividend received is exempt

CA UMESH DULAL

CA UMESH DULAL (Expert)

13 June 2014 Dividend received by you is exempted.
In case of redemption of MF units before 12 months, you have to pay short term capital gain.

CA Vivek Dugar

CA Vivek Dugar (Querist)

13 June 2014 Thank u sir for replying.

But in my case, dividend is earned in mutual funds but not receive in bank as it is dividend reinvestment plan and now on redemption, the redemption value = cost +dividend earned.

I am confuse, as whether there will be any short term capital gain or there will no gain/loss as difference in amount received and invested is dividend.

Kindly help

CA UMESH DULAL

CA UMESH DULAL (Expert)

13 June 2014 During the time of re-investment of dividend, you do not have to pay tax as it is exempted but during the time of sale of you have to pay tax.

calculate separately for each allotment to decide whether it is short term or long term.
less than 12 months-short term
other case -long term

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