Updated 2026-08-07

₹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 effective tax rate plateaus near 12.5% as gains grow

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).

After tax and inflation, the ₹99.9L corpus is worth ₹28.3L today

This is the number that matters for your retirement planning:

₹99.9L looks like ₹1 crore. It isn't.
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.

SIP beats inflation over 20 years; PPF and FD don't

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, since 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