Your capital gains statement

When you sell mutual fund units, you owe tax on the gain — the difference between what you paid and what you sold for. Working that out by hand is awkward, because an SIP buys units on dozens of different dates at different prices. The capital gains statement does the calculation for you, and it is what your tax return draws on. This explains what it is; it is not tax advice.

What it shows

A capital gains statement lists, for a chosen financial year, every redemption you made and the gain or loss on it. For each sale it matches the units sold back to the instalments that bought them, takes the purchase cost and the sale value, and reports the difference. Crucially it splits each gain into short-term and long-term according to how long those particular units were held — the distinction that decides how the gain is taxed for equity funds and for debt funds.

Why an SIP makes it necessary

Each SIP instalment is a separate purchase at that day’s NAV. Sell part of your holding and the system has to decide which units you sold — the convention is first-in, first-out, so the oldest units go first. That, in turn, decides how long each sold unit was held, and therefore whether its gain is short- or long-term. Doing this across a year of instalments and several redemptions by hand is error-prone; the statement applies the convention consistently.

How it differs from a CAS

It is easy to confuse this with the Consolidated Account Statement (CAS), but they answer different questions. A CAS shows what you hold — your units, transactions and their current value. A capital gains statement shows what you realised — the profit or loss on what you sold, computed for tax. You reach for a CAS to see your position; you reach for a capital gains statement to file your return.

How to get one

The registrars that keep the industry’s records — between them they cover the whole market — will generate a capital gains statement for a financial year on request, delivered to your registered email and tied to your PAN. Most investment platforms produce one too. Because it is keyed to your PAN and sent to your registered email, keeping those details current as part of your KYC is what makes sure the statement reaches you and is complete.

Reading it at filing time

At tax time the figure you need is the total short-term and total long-term gain for the year, which the statement totals for you. What the tax on those figures actually comes to depends on the current rules and your own circumstances, and those rules change at budgets — so treat the statement as the reliable record of the gain, and confirm the tax on it with a qualified tax adviser.