SIP Tax Benefits You Should Know

From ELSS to long-term capital gains, here’s how SIPs are taxed — and how to plan redemptions to keep more of your returns.

ELSS via SIP: EEE with a twist

ELSS (Equity Linked Savings Scheme) qualifies for deductions under Section 80C up to ₹1.5 lakh a year. Each SIP instalment has a separate 3-year lock-in. Post lock-in, gains are subject to equity taxation (LTCG/STCG).

Equity taxation basics

Holding period	Tax
Short term (<= 12 months)	STCG @ 15%
Long term (> 12 months)	LTCG @ 10% above ₹1 lakh gains/year

Smart withdrawal strategy

Use FIFO lots with lowest tax impact first.
Spread redemptions across financial years to utilize the ₹1 lakh LTCG exemption each year.
For income needs, consider SWP from debt funds for stability.

Want to see tax impact vs corpus? Use our SIP calculator and model different timelines, returns and step-up rates.
Plan with the SIP Calculator

* SIPGenie articles are generated from multiple sources and reviewed by AI, is for informational purposes only. It is not investment advice; please consult a qualified financial advisor before making any investment decisions.