SIP Tax Harvesting Calculator
Compare what a SIP leaves you after tax when the annual long-term equity exemption is used every year against redeeming it all in one go.
What the SIP + harvesting calculator does
A SIP tax harvesting calculator compares two ways of ending the same SIP: redeeming everything at once, or realising gains up to the annual long-term equity exemption each year and repurchasing. Because the exemption does not carry forward, using it yearly lowers the gain left when you finally sell.
Your inputs
An assumption you are making, not a rate anyone is offering
Equity funds only. The exemption this page turns on applies to equity, and a debt fund bought today has no equivalent — its gain is taxed at your slab rate however long you hold it.
Tax you would not pay, over 15 years
₹1,66,185
By realising ₹13,29,477 of gain inside the exemption across 13 years, instead of letting it all land in the year you finally sell.
- Invested
- ₹18,00,000
- Value at the end
- ₹50,45,760
- Total gain
- ₹32,45,760
Illustration only, computed from the assumptions shown — not a forecast, a projection of any scheme's performance, or a guarantee. Mutual fund investments are subject to market risks; read all scheme related documents carefully.
The two ways of ending the same SIP
Same instalments, same return, same value at the end. Only the tax differs.
| Redeem it all at the end | Harvest every year | |
|---|---|---|
| Value before tax | ₹50,45,760 | ₹50,45,760 |
| Long-term gain when you sell | ₹32,37,667 | ₹19,08,190 |
| Exemption applied that year | ₹1,25,000 | ₹1,25,000 |
| Long-term tax at 12.5% | ₹3,89,083 | ₹2,22,899 |
| Short-term tax at 20% | ₹1,619 | ₹1,619 |
| Total tax | ₹3,90,702 | ₹2,24,517 |
| Left in your hand | ₹46,55,058 | ₹48,21,243 |
Note the exemption row. Redeeming everything in one go still gets that year’s ₹1,25,000 — harvesting is one exemption a year against one exemption in total, not one against none. Comparisons that forget this overstate the benefit by ₹15,625.
The tax is worked out from the rates and annual exemption in force, applied to the assumed figures above — not a tax computation or filing advice. Illustration only, computed from the assumptions shown — not a forecast, a projection of any scheme's performance, or a guarantee. Mutual fund investments are subject to market risks; read all scheme related documents carefully.
Year by year
The first year always realises nothing: on that 31 March even the earliest instalment is under twelve months old. The exemption it could not use is gone — it does not carry forward.
| Year | Invested | Value | Harvested | Exemption unused |
|---|---|---|---|---|
| 1 | ₹1.2L | ₹1.28L | — | ₹1,25,000 |
| 2 | ₹2.4L | ₹2.72L | ₹24,339 | ₹1,00,661 |
| 3 | ₹3.6L | ₹4.35L | ₹42,644 | ₹82,356 |
| 4 | ₹4.8L | ₹6.18L | ₹63,272 | ₹61,728 |
| 5 | ₹6L | ₹8.25L | ₹86,515 | ₹38,485 |
| 6 | ₹7.2L | ₹10.58L | ₹1,12,707 | ₹12,293 |
| 7 | ₹8.4L | ₹13.2L | ₹1,25,000 | ₹0 |
| 8 | ₹9.6L | ₹16.15L | ₹1,25,000 | ₹0 |
| 9 | ₹10.8L | ₹19.48L | ₹1,25,000 | ₹0 |
| 10 | ₹12L | ₹23.23L | ₹1,25,000 | ₹0 |
| 11 | ₹13.2L | ₹27.46L | ₹1,25,000 | ₹0 |
| 12 | ₹14.4L | ₹32.23L | ₹1,25,000 | ₹0 |
| 13 | ₹15.6L | ₹37.59L | ₹1,25,000 | ₹0 |
| 14 | ₹16.8L | ₹43.64L | ₹1,25,000 | ₹0 |
| 15 | ₹18L | ₹50.46L | — | redeemed |
₹4,20,523 of exemption expires unused across the tenure — mostly in the early years, when there is not yet enough gain to fill it. Nothing can be done about that; it is simply what the allowance being annual means.
The tax is worked out from the rates and annual exemption in force, applied to the assumed figures above — not a tax computation or filing advice. Illustration only, computed from the assumptions shown — not a forecast, a projection of any scheme's performance, or a guarantee. Mutual fund investments are subject to market risks; read all scheme related documents carefully.
What this assumes, and where it flatters harvesting
- Returns arrive in a straight line. They do not. Harvesting depends on the path, not just the destination: a flat or falling year offers nothing to realise, and that year’s exemption is simply lost. A smooth curve is the friendliest case this strategy ever gets.
- Nothing else in your life uses the exemption. It is one allowance per person per year across every equity fund and listed share you hold. Any other gain you realise takes priority over this arithmetic.
- The repurchase happens at the same NAV. In practice settlement puts a few working days between selling and buying back, and the market does not pause for them. Each round trip also restarts the twelve-month clock and a fresh exit load period on those units.
- The SIP starts in April. Beginning mid-year delays the first harvest without changing the shape of the answer.
- Those round trips move ₹68.61L in and out over the tenure, costing roughly ₹412 in securities transaction tax and stamp duty. Small, but it is real and it is not in the figures above.
No returns are assured or guaranteed. Any illustration of returns is a mathematical projection, not a promise. GrowIQ Capital is a mutual fund distributor and does not provide tax advice. This is arithmetic on the figures you entered, for discussion with a qualified tax adviser.
How the tax harvesting comparison works
Each 31 March: realise long-term gains up to the exemption, repurchase at that NAV
Rather than a formula, this simulates the individual purchase lots a SIP creates, because the answer depends on which instalments were long-term on each 31 March and how much gain each held at that moment. Lots are consumed oldest first, as the Income Tax Act requires, and units bought back carry the repurchase date — so the twelve-month holding period restarts, exactly as it does in practice. The value before tax is identical to the plain SIP calculator; only the tax differs.
Frequently asked questions
What is tax harvesting in a SIP?
Tax harvesting means selling enough long-term units each financial year to realise gains up to the annual exemption under section 112A, then buying the units back. No tax falls due on those gains, and the repurchase resets your cost to a higher figure, so less gain remains when you eventually redeem for real.
Why can I not harvest in the first year of a SIP?
Units must be held for more than twelve months before their gain is long-term. On the first 31 March of a SIP, even the earliest instalment is under a year old, so nothing qualifies. The first harvest opportunity falls in the second financial year.
Does buying the units back cause any problem?
India has no wash-sale rule for mutual funds, so repurchasing immediately is permitted. The cost is that the new units restart the twelve-month holding period and a fresh exit load period, and settlement leaves a few days between the redemption and the repurchase during which you are out of the market.
Is tax harvesting always worth doing?
No. If your entire lifetime gain would fit inside a single year's exemption, redeeming in one go is already tax-free and every round trip along the way achieves nothing. Harvesting only helps once the gain is large enough that one exemption cannot cover it.
Does the exemption carry forward if I do not use it?
No. The annual exemption on long-term equity gains applies to each financial year on its own. Whatever is unused on 31 March is gone, and the next year starts again at the full amount.
Is the exemption per fund or per person?
Per person, per financial year, across every equity mutual fund and listed share you hold. Any gain realised elsewhere in the same year uses the same allowance, so a projection that looks only at one SIP will overstate the room available.
GrowIQ Capital provides financial data analytics, market information and educational content. We are not a SEBI-registered Investment Adviser or Research Analyst. Nothing on this platform constitutes investment advice or a recommendation to buy or sell any security. No returns are assured or guaranteed. Any illustration of returns is a mathematical projection, not a promise. Past performance is not indicative of future returns and does not guarantee future results.