Updated 2026-07-13

₹10,000 SIP for 20 Years: Real Returns After LTCG Tax

Most calculators show you ₹99.9L for ₹10K/month SIP over 20 years at 12%. What they don't show: LTCG tax takes 9.3% of that, and inflation eats another 60% of purchasing power. Here is what you actually get to spend.

Metric	Amount	What It Means
Total invested	₹24,00,000	₹10K × 12 months × 20 years
Gross corpus (12% CAGR)	₹99,91,480	What the app shows you
Total capital gains	₹75,91,480	₹99.9L - ₹24L
LTCG exemption (₹1.25L/yr × 20)	₹25,00,000	Tax-free threshold over 20 years
LTCG tax @ 12.5% on taxable gains	≈₹9,33,000	(₹75.9L - ₹25L) × 12.5% + cess
Post-tax corpus	≈₹90,58,000	What you can actually withdraw
Real value (after 6% inflation)	≈₹28,25,000	Purchasing power in today's terms

The Ladder: How Tax Impact Grows with Time

The longer your SIP, the more gains you accumulate, and the larger the tax bite — but the effective tax rate stays roughly the same:

10 years: Gross ₹23.2L, gains ₹11.2L, tax ≈₹1.2L, effective rate: 5.2% of gains
15 years: Gross ₹50.5L, gains ₹32.5L, tax ≈₹3.9L, effective rate: 12.0% of gains
20 years: Gross ₹99.9L, gains ₹75.9L, tax ≈₹9.3L, effective rate: 12.3% of gains
25 years: Gross ₹1.90 Cr, gains ₹1.60 Cr, tax ≈₹19.9L, effective rate: 12.4% of gains

The effective rate approaches 12.5% as gains grow because the ₹1.25L/year exemption becomes proportionally smaller. But even at 12.5%, SIP is far more tax-efficient than FD (taxed at slab rate) or specified debt funds (taxed at the applicable slab rate).

The Real Return: After Tax and Inflation

This is the number that matters for your retirement planning:

Nominal corpus: ₹99.9L — looks like ₹1 Crore
After LTCG tax (12.5%): ₹90.6L — your actual withdrawal
After 6% inflation over 20 years: ₹28.3L in today's purchasing power

The ₹28.3L is what your ₹10K/month SIP can actually buy in today's terms 20 years from now. Is that enough for retirement on its own? No — but combined with EPF, PPF, and other savings, it forms a significant part of your retirement corpus.

How to Minimize LTCG Tax on Your SIP

Spread redemptions across financial years: Each year gets a fresh ₹1.25L exemption. If you need ₹5L for a goal in year 20, withdraw ₹1.25L over 4 years to stay tax-free.
Tax-loss harvesting: If one fund has losses, sell it to offset gains from another. This is legal and common.
Family exemption: Your spouse and parents each have their own ₹1.25L exemption. If they're in lower tax brackets, gift them funds and let them redeem.
Hold forever (for inheritance): If you never sell, no tax. Your heirs get the funds at the market price on your date of death — the gains up to that date escape capital gains tax entirely.

Why SIP Still Beats Everything at 20 Years

Even after LTCG tax and inflation, a 20-year SIP at 12% delivers ≈2.4% real return above inflation. Compare:

SIP post-tax real: ₹28.3L (₹24L invested = 18% real gain)
PPF post-tax real: ₹16.2L (₹24L invested = -32% real loss due to inflation > PPF rate)
FD post-tax real: Negative (7% - 30% tax = 4.9% net, below 6% inflation)

SIP is the only instrument that beats inflation over 20 years. Use the SIP calculator to experiment with different amounts and see the post-tax values.

Frequently Asked Questions

How much does LTCG tax reduce my ₹10K SIP corpus?

On ₹10K/month SIP for 20 years at 12%: gross corpus ₹99.9L, post-LTCG corpus ₹90.6L. Tax reduces the corpus by ≈9.3%. The impact is smaller than many expect because: (1) ₹1.25L annual exemption covers gains from the first few years, (2) 12.5% rate is much lower than your income tax slab, (3) only gains are taxed, not the entire corpus.

Is LTCG tax calculated per SIP installment?

Yes. Each SIP instalment is a separate purchase with its own holding period. When you redeem, FIFO applies: the oldest units (held longest) are sold first. Units held >12 months get LTCG treatment (12.5% above ₹1.25L exemption). Units held ≤12 months get STCG treatment (20%). Most platforms automatically handle this calculation in your capital gains statement.

Can I avoid LTCG tax on SIP?

Not legally, but you can minimize it: (1) stay within the ₹1.25L annual exemption by redeeming only what you need each year, (2) tax-harvest losses — sell losing funds to offset gains, (3) hold for the long term — the exemption resets every April. A family of four can jointly claim ₹5L exemption. Also consider that PPF and EPF remain fully tax-free (EEE).

Is LTCG taxed differently on debt mutual fund SIP?

Yes. Debt fund SIP has different rules: Specified debt mutual fund units acquired on or after 1 April 2023 are taxed as short-term capital gains at your slab rate regardless of holding period. Debt funds are less tax-efficient than equity funds for long-term SIP. For a 20-year horizon, equity SIP's 12.5% LTCG with indexation-free calculation is more favorable.

What is the effective tax rate on my SIP after 20 years?

For ₹10K/month SIP at 12% over 20 years: total gain = ₹75.9L, LTCG tax = ₹9.33L, effective tax rate = 12.3% (close to the 12.5% headline rate). But since the ₹1.25L annual exemption covers some gains each year, the effective rate on total gains is about 12%. Compare this to FD where interest is taxed at your 30% slab rate: SIP is significantly more tax-efficient.

Try it yourself → SIP Calculator