Ch.8 · Dividend and STT Taxation · hard
How is capital gains tax computed for SIP investments using the FIFO method?
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EXPLANATION
FIFO (First In First Out) applies to SIP redemptions. If an investor has 12 monthly SIP instalments and redeems 3 months' worth of units, the first 3 months' instalments are considered redeemed. Each instalment has its own purchase NAV and date — gain = (Redemption NAV - Purchase NAV) × Units redeemed from that instalment. Holding period for LTCG/STCG classification is calculated from each instalment's purchase date.
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