# Mutual Fund SIP Returns

> A SIP invests a fixed amount every month; its future value is P × [((1 + i)^n − 1) ÷ i] × (1 + i), where i is the monthly return and n the number of months. Returns aren't guaranteed — the rate you enter is an assumption. For tax, each instalment is a separate purchase, so redemptions are matched first-in-first-out and some units may be short-term even after years.

Interactive calculator: https://www.industax.com/calculators/sip-returns

- **₹10,000/month, 12%, 10 years:** ≈ ₹23.2 lakh
- **Each instalment's holding period:** Counted separately (FIFO)
- **Equity MF LTCG:** 12.5% above ₹1.25L

## What drives the corpus

- Time in the market matters more than the monthly amount
- A yearly step-up of 10% can raise the final corpus substantially
- Expense ratios reduce returns every year — direct plans cost less
- Assumed returns should be conservative for planning

## Tax on SIP redemptions

| Fund type | Short-term | Long-term |
| --- | --- | --- |
| Equity funds (≥ 65% Indian equity) | ≤ 12 months: 20% | > 12 months: 12.5% above ₹1.25 lakh |
| Debt funds (bought from April 2023) | Slab rate | Slab rate |
| Other funds (hybrid, FoFs, international) | Slab rate (≤ 24 months) | 12.5% (> 24 months), depending on type |

## Worked example: 10-year SIP

1. ₹10,000 a month for 10 years (120 instalments) at an assumed 12% annual return (1% monthly).
2. Future value = ₹10,000 × [(1.01^120 − 1) ÷ 0.01] × 1.01 ≈ ₹23,23,391.
3. Amount invested = ₹12,00,000; estimated gain ≈ ₹11.2 lakh.

**Result:** Corpus ≈ ₹23.2 lakh, before tax on redemption.

## FAQs

### Is SIP return the same as XIRR?

Fund factsheets often show point-to-point returns; for SIPs, XIRR is the right measure because each instalment is invested for a different period.

### Do ELSS SIPs have a lock-in per instalment?

Yes. Each ELSS SIP instalment is locked for three years from its own date.

### Does stopping a SIP have tax consequences?

No. Tax arises only when you redeem units.

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Canonical page: https://www.industax.com/calculators/sip-returns
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.