What tax do I pay when I sell my SIP units?
You do not sell “a SIP.” You sell dated lots. FIFO picks which years you owe.
Skip to the calculator below this article
Every installment is a mini purchase
Each SIP instalment is its own purchase lot. FIFO means the oldest units leave first, not the ones you emotionally like.
Equity mutual funds: buildings held 12 months+ generally face LTCG at 12.5% above a ₹1.25 lakh yearly exemption (rules as of recent budgets). Shorter holdings face STCG at 20%.
If you skip this step, the rest is theatre.
I keep seeing people in Guwahati argue this on family WhatsApp like it is a moral issue.
The spreadsheet is the easy half. The debit surviving April is the rest.
Your 40-month SIP is not one holding period. Month-1 units may be long-term while last month’s units are short-term on the same redeem click.
When the gap looks ugly, the gap is doing its job.
Nobody hands out a medal for pretending your Excel is braver than your salary.
Exemption first, then 12.5% on the rest of LTCG.
FIFO is the quiet clerk
Download the capital-gains statement from the RTA or AMC, not just the app’s current value tile.
If you need money in 60 days, maybe wait till lots age past 12 months if STCG would bite and the goal can slip.
Open a calculator and type the ugly version first—Redeem ₹6 lakh to buy a car, oldest lots with ₹1.6 lakh long-term gain plus ₹40,000 short-term gain, and zero rupees set aside.
Pretty assumptions belong in investor-day decks, not in your rent money.
Keep a 10–15% haircut in the plan for tax so the car invoice is not paid by a credit card.
Debt and specified funds follow different, often slab-rate, treatment after 2023. Do not copy an equity tax story onto a debt folio.
If you cannot explain the result to a slightly impatient parent, you do not understand it yet.
Myths that overpay or under-provision
Thinking SIP withdrawals are tax-free like a PPF. They are not.
Believing you can pick the newest units first to “save tax.” FIFO at the AMC is not a buffet.
Ignoring grand-fathering or budget changes and using a 2018 blog as a calculator.
The internet will sell you a one-line rule. One-line rules do not pay EMIs.
Your cousin’s 2017 small-cap luck is not a policy.
A plan that never gets a yearly refresh is a framed poster.
In Guwahati the skipped review later becomes a complaint about luck. It was maintenance.
STCG at 20% hurts more per rupee than LTCG.
Redeem with a lot table, not a vibe
Small redeem under the LTCG exemption band, equity lots mostly aged: often a mild event. Still check the statement.
Large redeem straddling 12 months: expect mixed STCG/LTCG. Run numbers before you click.
Every January, harvest only if it actually uses the exemption without wrecking allocation. Tax-tail trading is a sport.
Buffer first, ugly debt second, this goal third. Reverse it and the goal becomes a loan.
Investing while revolving a 36% card is theatre.
Cut the size before you cut the habit. Habits are expensive to rebuild.
A smaller SIP or a shorter loan goal beats a heroic screenshot you cancel in six weeks.
₹2 lakh gain, mixed holding periods
₹2 lakh total gain: ₹1.25 lakh possibly exempt on LTCG, leftover ₹75,000 × 12.5% ≈ ₹9,400, plus any STCG slice at 20%.
Selling 4-year SIP units worth ₹8 lakh with ₹1.8 lakh LTCG and ₹20,000 STCG is a different bill from selling a 8-month lump.
A Guwahati buyer who “needs ₹5 lakh net” may have to redeem ₹5.4–₹5.6 lakh. Plan the gross.
Treat every rupee here as a sketch. Lenders and markets get a vote later.
If the plan only works at 18% returns or a 6% home loan forever, it is not a plan.
Stress it at a worse rate. If it still stands, you can live with the nicer years too.
Keep a 10% haircut for tax, fees, or the extra month the builder delays.
No lot report, no click.
Ask a CA when the number gets large
Open the lot report once before any five-lakh-plus redeem.
The app’s big green number is pre-tax until the CA says otherwise.
Quiet deposits look dull until they are the only thing that showed up.
Calendar reminder beats a quote about discipline.
If a friend in Guwahati asks the same thing next month, send them the calculator link, not a lecture.
And please date your spreadsheet. Future you will not remember which fantasy version this was.
Sketch, then confirm with the actual lender or a CA. This page does not sign cheques.
Change the numbers in the calculator above and see the result on this page.
Estimates only—not personalised financial, tax, or investment advice. Markets, loan rates, and tax rules change. Confirm numbers with your lender, CA, or advisor before acting.