Cap gain for mutual funds with dividend reinvestment option

This query is : Resolved

ANGAD SINGH (Querist)
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10 October 2011 Dear Sir,

Suppose a person purchases 3500 units with NAV Rs. 18/- in June 2005 and gets dividend as 18%, 20%, 21% and 19% in subsequent years which are reinvested on NAV as Rs. 19.25, 20, 21, 20.5. Also the Units are sold in sept 2010 for Rs22.6 per unit.

What is my long term and short term gain/loss?

Please advice briefly.

CA.E.Deepan Chakravarthy

CA.E.Deepan Chakravarthy (Expert)
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11 October 2011 LTCG is exempted and sTCG is taxable.
LTCG - holding period more than 12 months
STCG - holding period less than 12 months
Your reinvested dividend is the cost for acquisition of shares
Bifurcate no of units purchased within twelve months of transfer and more than twelve months of transfer.
No of units * 22.60 minus No of units * cost of purchase per unit = STCG or LTCG