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A Quick Word on Taxation
How SIP returns are taxed depends on the type of fund and how long you stay invested. Here's the simple version.
Short-Term Gains
Units sold within 12 months of each instalment.
Taxed at 20% (STCG) on the gains for that instalment.
Long-Term Gains
Units held beyond 12 months.
Gains above ₹1.25 lakh per year taxed at 12.5% (LTCG); gains up to ₹1.25 lakh are exempt.
All Gains
For units purchased on or after 1 April 2023.
Gains are added to your income and taxed at your applicable slab rate, regardless of how long you hold — with no indexation benefit.
⚠️ Each SIP instalment is treated as a separate investment for holding-period and tax purposes. An equity fund is one that holds 65%+ in domestic equity; others may be taxed as debt or under separate rules. Tax rules are subject to change — please consult us or a tax advisor for your specific situation.
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