What is the formula used to calculate SIP returns in India?

The SIP compound growth formula is FV = P × [((1+r)^n – 1) / r] × (1+r), where P is the periodic monthly investment, r is the monthly rate of return (annual return divided by 12 / 100), and n is the total number of monthly payments.

What is a Step-Up SIP and why does it generate higher returns?

A Step-Up (top-up) SIP automatically increases your monthly mutual fund installment by a fixed percentage (e.g., 10%) each year in sync with annual salary appraisals. This compounding boost can double your final retirement corpus compared to a flat SIP.

How are equity mutual fund SIP returns taxed in India?

Under Section 112A, Long-Term Capital Gains (LTCG) on equity mutual funds held for over 12 months are taxed at 12.5% for annual gains exceeding ₹1.25 Lakh. Short-Term Capital Gains (STCG) on units held for 12 months or less are taxed at 20%.

Mutual Fund Engine Real-time Compounding

SIP Calculator 2026 – Systematic Investment Plan

Discover the compounding power of disciplined monthly investing. Move the sliders to forecast your total wealth, invested amount, and estimated capital gains.

SIP Parameters

Monthly Investment ₹10,000 / mo

₹

Expected Annual Return Rate (CAGR) 12.0% p.a.

Time Period 10 Years

Years

Annual Step-Up (% p.a.) Wealth Accelerator 0% (Disabled)

Increase monthly investment each year matching your annual salary appraisal.

Expected Total Future Value

₹23,23,391

Total Invested Amount

₹12,00,000

Estimated Wealth Gains

₹11,23,391

Cost of Procrastination: Delayed Start Opportunity Cost -₹12.4 Lakh Loss

Quantifies the severe terminal wealth penalty and catch-up SIP burden if you delay starting your inflation-beating Step-Up SIP.

Delay in Starting:

Catch-Up Monthly SIP Needed:

₹13,250 / mo (+32.5%)

Immediate Start

₹45,20,000

Full Tenure Compounding

Delayed Start

₹32,80,000

Truncated Horizon

Compounding Lost

-₹12,40,000

Permanent Loss

Delaying your investment by 2 years destroys compounding on early units, requiring a higher monthly investment to catch up.

Investment vs Returns Breakdown

Year-by-Year Wealth Schedule

Compound Growth

Year	Monthly SIP (₹)	Cumulative Invested (₹)	Est. Returns (₹)	Total Corpus (₹)

How Does a Systematic Investment Plan (SIP) Work?

A Systematic Investment Plan (SIP) allows an investor to invest a fixed amount of money regularly (monthly or quarterly) into a chosen mutual fund scheme. Instead of attempting to time the market, SIP leverages Rupee Cost Averaging and compound interest over time.

SIP Future Value Formula

The future value of a SIP is calculated using the standard annuity formula:

FV = P × [ (1 + i)ⁿ - 1 ] × (1 + i) / i

P = Monthly investment amount
i = Monthly interest rate (Annual rate ÷ 12 ÷ 100)
n = Total number of installments (Years × 12)

Power of Compounding Example

Consider a monthly SIP of ₹10,000 at a 12% expected return:

After 10 Years: Invest ₹12 Lakh → Total Value: ₹23.23 Lakh (Gains: ₹11.23L)
After 15 Years: Invest ₹18 Lakh → Total Value: ₹50.45 Lakh (Gains: ₹32.45L)
After 20 Years: Invest ₹24 Lakh → Total Value: ₹99.91 Lakh (~₹1 Crore!)