Ch.8 · Dividend and STT Taxation · hard
What is the tax treatment for a 'Systematic Investment Plan' redemption within 12 months of each instalment?
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EXPLANATION
Since each SIP instalment is a separate purchase transaction, the 12-month holding period is measured individually for each instalment. If an investor starts SIP in January 2023 and redeems all units in July 2024: January 2023 instalment has been held 18 months (LTCG); February 2023 instalment 17 months (LTCG); all instalments after July 2023 have been held less than 12 months (STCG). This creates a mixed tax liability requiring careful calculation.
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