kollipara sundaraiah asked 1 year ago
how to compute capital gain in case of SIP in mutul fund.if person rs:2500/-*4 total rs:20,000/- per month every month paid investment in sip mutul fund.
Doubt: Assessee compute capital gain tax investment sip in mutul fund in it act.
Manish answered 1 year ago
Capital Gain tax on SIP in mutual Fund
In SIP, a person may invest an amount per month or per week in an assets to accumulate good wealth in long run. SIP is a good method to cover the risk of short term volatility (ups and downs) of market.
Let’s see the taxability of capital gain in case of SIP in mutual fund as explained below:-
- NO capital gain tax unless units of mutual fund are sold. Tax is applicable only when units are sold.
- Find out the number of total units to be sold.
- Now find out holding period of units to be sold, (for example if In total I have 1000 units of a mutual fund and I am selling 50 units then holding period of first 50 units will be considered which were purchase first hence FIFO method (first in first out ) is followed in checking the holding period of units)
- Now find out the purchase value of those units which are being sold now.
- Now find our sale value of these units.
- Now by deducting purchase value from sale value, find out the Capital gain / capital loss.
- In case of SIP in equity oriented mutual fund , if holding period is less than 12 months then gain is considered as short term capital gain and loss is considered as short term capital loss.
- In case of SIP in debt oriented mutual fund, if holding period is less than 36 months then gain is considered as short term capital gain and loss is considered as long term capital loss.
- Short term capital gain on equity oriented mutual fund is taxable at the rate of 15%.
- Short term capital gain on Debt oriented mutual fund is taxable as per applicable slab rate.
- Long term capital gain on equity oriented mutual fund is exempt upto Rs. 100000/- and LTCG above Rs. 1 lakh is taxable @ 10%.
- Long term capital gain on Debt oriented mutual fund is taxable at the rate of 20% with indexation.
Hence taxability of mutual fund capital gain is not different even if you buy lump sum or through SIP. The only extra effort required in calculation of holding period as different instalments of SIP are having different holding period hence some part of investment may become long terms and some part may remain short term. Different tax rate is applied on different type of capital gain as explained above. Click here for more detail.