I had opted for a dividend reinvestment option in an equity fund that I had invested in last year. If I sell some units received in this fund within a year of receiving the units, what will be taken as the cost of acquisition to calculate capital gains?
Mukesh Surana, Jaipur
First; it will be much better to opt for the growth option over dividend reinvestment in an equity mutual fund, as logically the dividend is paid out to you by the fund, only to be redeployed into the same fund. In your case, you have used the dividend to purchase additional mutual fund units. The cost of acquisition of such additional units would be the amount of the re-invested dividend. The number of units is computed based on the NAV and the quantum of dividend accrued. The details about all these would appear in the mutual funds statement, which will be the basis on which you can calculate the capital gains.
