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FAQ & Financial Guides

Find answers to the most common questions about Systematic Investment Plans and how to maximize your returns.

1. What is the Rule of 15-15-15 in SIP?

The 15-15-15 rule is a famous thumb rule in mutual fund investing. It states that if you invest ₹15,000 every month for 15 years at an expected annual return of 15%, you will accumulate exactly ₹1 Crore (₹1,00,00,000). It demonstrates the immense power of compounding over long periods.

2. Is it better to do SIP on the 1st or 5th of the month?

Mathematically, the exact date of your SIP makes virtually zero difference over a 10 or 20-year horizon. However, practically, it is highly recommended to set your SIP date 2-4 days after your salary is credited (e.g., the 5th of the month). This ensures your bank account has sufficient funds and automates your savings before your monthly expenses begin.

3. What is a Step-Up SIP?

A Step-Up SIP allows you to increase your monthly SIP contribution by a fixed percentage or amount every year. As your income and salary grow, your investments should also grow. For example, if you start with ₹10,000 and choose a 10% Step-Up, next year your SIP will automatically become ₹11,000 per month.

4. How is SIP taxed in India?

In Equity Mutual Funds, every SIP installment is treated as an independent investment with its own distinct holding period:

  • Short Term Capital Gains (STCG): If units from an installment are redeemed within 1 year, STCG is taxed at 20% (plus applicable cess/surcharge).
  • Long Term Capital Gains (LTCG): If units are held for more than 1 year, LTCG is taxed at 12.5% on gains exceeding ₹1.25 Lakhs per financial year.

Note: Tax rates, holding periods, and threshold limits are prescribed under the Income Tax Act, 1961, and are subject to amendments enacted by the Government of India through annual Finance Acts and Union Budgets.

5. Can I claim Section 80C tax deduction on SIP?

Yes, but only if you invest in an Equity Linked Savings Scheme (ELSS) mutual fund and opt for the Old Tax Regime. Under Section 80C of the Income Tax Act, 1961, you can claim a tax deduction of up to ₹1.5 Lakhs per financial year. If you file your taxes under the default New Tax Regime, Section 80C deductions are not available.