Question

What is the cost of acquisition for units purchased through SIP for capital gains calculation?

Accepted Answer

Each SIP instalment is treated as a separate purchase at its respective NAV — FIFO (First In First Out) method determines which units are redeemed when calculating gains — For SIP investments, each instalment is treated as a separate purchase at its own NAV and date. When units are redeemed, the FIFO method (First In First Out) is used — the earliest purchased units are considered redeemed first. This means the first SIP instalments (oldest, most likely LTCG) are redeemed first. Each instalment's gain is calculated separately based on its own cost and holding period.