STP Tax Calculator
Work out what a systematic transfer plan costs in tax — every transfer is a redemption from the source fund, and each one starts a fresh holding period in the target.
What the STP tax calculator does
An STP tax calculator shows the tax on a systematic transfer plan. Each transfer redeems units of the source fund, so it is taxable even though no money reaches your bank. The transfers also start a separate twelve-month holding period in the target fund each time.
Your inputs
Counted from the start, transfers included — not from when they finish
Source fund
Bought on or after 1 April 2023, so every transfer out is taxed at your slab rate.
Target fund
Your income tax slab
Tax on moving ₹12,00,000 across
₹10,185
A transfer is a redemption of the source fund and a fresh purchase of the target, so it is taxable even though no money reached your bank. The 12 transfers realised ₹33,950 of gain — 0.85% of what you moved.
- Transfers made
- 12
- Gain realised in the source
- ₹33,950
- Taxed at
- 30% slab rate
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.
Every transfer is past its twelve months
The last transfer landed more than a year before the 10-year mark, so the whole holding is long-term. Had you redeemed as the STP finished instead, almost none of it would have been.
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.
Where it stands after 10 years
What selling the target on that day would cost, with each parcel judged on its own acquisition date rather than on when the plan started.
Target fund is worth
₹35,40,250
Gain inside it
₹23,40,250
Tax if you sold then
₹2,76,906
- Long-term gain
- ₹23,40,250
- Exemption applied
- ₹1,25,000
- Still sitting in the source fund
- ₹63,728
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 transfers, year by year
The tax on the source side falls in the years the transfers happen, whatever you do with the target afterwards.
| Year | Moved across | Your capital | Gain realised | Tax |
|---|---|---|---|---|
| 1slab | ₹12L | ₹11.66L | ₹33,950 | ₹10,185 |
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.
Against putting it in all at once
Investing the ₹12L straight into the target sells nothing, so it pays none of the ₹10,185 above, and its twelve months start on day one rather than being staggered.
This is not an argument for either one. At a fixed rate, with the target assumed to return more than the source, investing at once always finishes ahead — ₹37.27L against ₹36.04L here — because the money reaches the higher-returning fund sooner. That result falls straight out of assuming a constant return, and it is not what an STP is for. Staggering spreads the entry price across months, which only matters because real returns are not constant, and no calculator that assumes one can show it. What it can show is the tax, which is above.
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
- The corpus went into the source fund in one go. Units are redeemed oldest first, so a source built up over time would have parcels of different ages and a different split between short and long term.
- Both funds return a fixed rate. They do not. The transfers realise whatever gain actually exists on the day, and a source fund that fell would realise a loss instead.
- Exit load is not included. A transfer out is a redemption for load purposes too. Liquid funds carry a graded load for the first seven days; many short-duration funds carry none.
- Nothing else in your year uses the annual exemption, and surcharge and cess are excluded.
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 STP tax calculation works
Each transfer: taxable gain = amount moved − (source units sold × their cost)
A transfer redeems source units and buys target units on the same day, so it is taxed as a redemption even though no money reaches your bank. Source units are sold oldest first. On the target side each transfer is tracked as its own parcel with its own acquisition date, because the whole holding only becomes long-term twelve months after the FINAL transfer — not twelve months after the plan began. The transfer schedule and the month the source runs dry match the STP calculator exactly.
Frequently asked questions
Is an STP tax-free because the money never reaches my bank?
No. A switch or transfer is treated as a redemption of the source fund and a fresh purchase of the target. The redemption is taxable in exactly the same way as any other sale, whether or not the proceeds passed through your bank account.
How is the source fund taxed in an STP?
By what the source fund is. Units in a debt fund bought on or after 1 April 2023 are taxed at your income tax slab rate however briefly they are held, with no annual exemption. An equity source follows the usual rules: short-term for the first twelve months, long-term after that.
When does my target fund become long-term?
Each transfer buys units on the day it lands and starts its own twelve-month clock, so the whole holding is not long-term until twelve months after the final transfer — not twelve months after the STP began. Redeeming a twelve-month STP the day it completes means almost every unit is still short-term.
Does an STP cost more tax than investing a lumpsum?
On the source side, yes. A lumpsum invested directly into the target sells nothing, so it pays none of the transfer tax an STP incurs. What a lumpsum gives up is spreading the entry price across months, which cannot be shown in a calculator that assumes a constant return.
Is there an exit load on STP transfers?
There can be. A transfer out of the source scheme is a redemption for exit load purposes too, so a scheme with a load on early redemption will charge it. Liquid funds carry a graded load for the first seven days; many short-duration funds carry none.
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.