Dividend on Mutual Fund Re-invested

This query is : Resolved

PRANAV TRIVEDI (Querist)
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14 July 2008 I have 100 equiety oriented units of MF amounting Rs.1000/- as on 01-04-07. The balance of units as on 31-03-2008 is 110 amounting Rs.15000/- as 10 units reinvested amounting Rs.100/- by way of dividend. Dividend Reinvestment on 01-09-07. I sold all the 110 units as on 01-05-08. what will be the tax effect? what will be the cost of purchase?

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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14 July 2008 The dividend income is exempt u/s 10. Amount of dividend has been reinvested in units on 1.9.2007. Nature of MF has not been explained. In case it is equity oriented mutual fund then the gain on original 100 units is Long Term and exempt from tax but the gain on balance 10 units will be chargeable as STCG @ 10% otherwise normal capital Gain Tax Rates will be applicable.

PRANAV TRIVEDI

PRANAV TRIVEDI (Querist)
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14 July 2008

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