New Delhi, Jan. 8 -- When you redeem your mutual funds after holding them for a period longer than 12 months, long-term capital gains (LTCG) tax is payable on them. When the redemption takes place in less than 12 months, short-term capital gains (STCG) tax is payable on it.

Most investors only sell a portion of their portfolio, and these include some of the units they acquired at different price points over a period of time. Therefore, how can one determine when the units that are being sold today were indeed acquired?

The short answer to the above question is FIFO, i.e., First In First Out. In other words, the units that are purchased first are believed to be sold first.

The FIFO method, which is common among the sale of shares as wel...