What the SIP calculator computes
It is time-value arithmetic. A SIP is an annuity of equal periodic payments. In amount-to-corpus mode, you type the SIP amount, the assumed annual return and the term in years, and the page gives the maturity value. In target-to-SIP mode, you type the corpus you want and the term, and the page gives the monthly SIP needed at that assumed return. Both modes use the standard future value of an annuity, written for payments at the start of each month, so every instalment earns a full month of return in the month it is paid.
The future-value formula this page uses is: FV equals the monthly SIP, times the quantity (one plus r) raised to the power n minus one, divided by r, times (one plus r), where r is the monthly rate and n is the number of months. The trailing (one plus r) accounts for the start-of-month contribution.
The two rate methods, and why answers differ
Two SIP calculators can show different answers on the same inputs because they convert the annual rate to a monthly rate differently.
- Method 1: annual rate divided by 12. A stated 12 per cent per annum is converted to 1 per cent per month. This is the simpler convention, and the one many free SIP calculators appear to use.
- Method 2: effective monthly rate. The monthly rate is set so twelve compoundings of it give the stated annual rate. For 12 per cent per annum the effective monthly rate is (1.12)^(1/12) minus 1, which is about 0.9489 per cent.
If 12 per cent is meant as the return for a full year, Method 1 overstates the maturity value, because 1 per cent a month compounds to about 12.68 per cent a year. Method 2 compounds to exactly 12 per cent. The page lets you pick either and shows the rupee difference, so the choice is visible.
Worked example (checkable with a pocket calculator)
Take ₹10,000 a month, an assumed annual return of 12 per cent and a term of 10 years, with each instalment paid at the start of the month.
- Under Method 1 the monthly rate is 1 per cent and n is 120. FV equals 10,000 times (1.01^120 minus 1) divided by 0.01, times 1.01. 1.01 raised to 120 is 3.300387. (3.300387 minus 1) divided by 0.01 is 230.0387. Times 1.01 is 232.3391. Times 10,000 is ₹23,23,391.
- Under Method 2 the monthly rate is 0.9489 per cent and n is 120. 1.009489 raised to 120 equals 1.12 raised to 10, which is 3.105848. (3.105848 minus 1) divided by 0.00948879 is 221.930. Times 1.00948879 is 224.036. Times 10,000 is about ₹22,40,359.
On the same inputs, the two methods differ by about ₹83,032, or about 3.6 per cent, and the gap widens as the term grows. If one calculator shows a bigger number than another on the same inputs, the rate conversion is the first thing to check.
Inflation and real purchasing power
₹23,23,391 in ten years' time is not ₹23,23,391 in today's terms. The inflation-adjusted view divides the corpus by one plus the inflation rate, raised to the number of years. At 6 per cent inflation for 10 years, the real value of ₹23,23,391 is ₹23,23,391 divided by 1.06 to the tenth power, which is 23,23,391 divided by 1.7908, or about ₹12,97,369. That is the buying power your corpus has at maturity, not what the fund statement will say.
Switch on the inflation view and the widget shows both figures side by side at the inflation rate you enter.
Sensitivity to the assumed return
Small changes in the assumed return move the corpus a lot over a long horizon. Hold the SIP at ₹10,000 and the term at 10 years:
| Assumed annual return (Method 1) | Corpus at month 120 | Difference from 12 per cent |
|---|---|---|
| 8 per cent | ₹18,41,657 | minus ₹4,81,734 |
| 10 per cent | ₹20,65,520 | minus ₹2,57,871 |
| 12 per cent | ₹23,23,391 | baseline |
| 14 per cent | ₹26,20,914 | plus ₹2,97,523 |
| 16 per cent | ₹29,64,715 | plus ₹6,41,324 |
The point of the table is not to pick a number. It is that the maturity value is a function of your rate assumption, so the rate assumption deserves your attention before the corpus does. Historical fund returns are published in the Scheme Information Document for every mutual fund and in the monthly fact sheet; they do not carry a promise about what the fund will do next.
The cost of delaying the start
If the same SIP of ₹10,000 starts one year later and ends on the same date, the term drops from 120 months to 108 months, and under Method 1 the corpus falls to ₹19,48,215. That is ₹3,75,176 less, of which only ₹1,20,000 is the money not paid in. Two years late is about ₹7,08,000 less, and three years late is about ₹10,04,000 less. The widget charts the delay for 1, 3 and 5 years on your inputs.
Capital gains on redemption (education, not a tax opinion)
When you redeem units of an equity-oriented mutual fund (a fund that holds at least 65 per cent domestic equity), the gain is taxed under the capital-gains regime set by the Finance (No. 2) Act, 2024, effective for transfers on or after 23 July 2024 and preserved under the Income-tax Act, 2025.
- Short-term capital gain (units held up to 12 months): 20 per cent.
- Long-term capital gain (units held more than 12 months): 12.5 per cent on the amount above the ₹1,25,000 annual exemption on listed equity and equity mutual funds combined.
Illustration using the earlier Method 1 example. Suppose the ₹23,23,391 corpus is all redeemed at once from an equity-oriented fund. The invested amount was ₹10,000 times 120, or ₹12,00,000, so the total gain is ₹11,23,391. Treating the whole gain as long-term, the taxable amount after the ₹1,25,000 exemption is ₹9,98,391, and tax at 12.5 per cent is about ₹1,24,799. That is a simplification: each instalment has its own holding period, so units bought in the final 12 months would count as short-term and be taxed at 20 per cent. Surcharge and cess are left out.
Debt-oriented and specified mutual funds are treated differently, and your own position may differ, so check it with a qualified chartered accountant.
Target-to-SIP mode
Rearranged, the same formula answers the reverse question: what SIP builds a given corpus? The widget solves for the monthly amount given the target, the term and the assumed return. For a ₹1 crore corpus in 15 years at 12 per cent under Method 1, the SIP works out to about ₹19,819 a month. The page shows the solution and the arithmetic.
What this calculator does not cover
- Exit loads, if your fund charges one on early redemption.
- Changes to the SIP mandate between months, including pauses, switches and a top-up that is not a step-up percentage.
- Dividend or payout-plan units, where the NAV behaviour is different from a growth plan.
- Tax on dividends, which is taxed in the investor's slab under the dividend regime.
Frequently asked questions
What formula does this SIP calculator use?
Future value of an annuity due. Monthly SIP times the quantity (one plus r) to the power n minus one, divided by r, then times (one plus r) for the start-of-month contribution. Here r is the monthly rate and n is the number of months.
Why does my SIP calculator give a different answer to yours?
The usual causes are the rate conversion (annual rate divided by 12, or the effective monthly rate) and whether instalments are paid at the start or end of the month. On ₹10,000 at 12 per cent for 10 years, the two rate methods alone differ by about ₹83,000.
Is the SIP calculator for growth or dividend plans?
Growth plans. The future-value formula assumes every rupee you invest keeps compounding at the assumed rate. A dividend plan pays amounts back to you periodically, so its effective rupee-weighted return is different, and a SIP calculator for growth will overstate what a dividend plan builds.
Does the calculator take into account exit load and expense ratio?
Expense ratio is already deducted from the NAV, so if you use a realistic net-of-expense return, the calculator reflects it. Exit load is a one-off haircut on early redemption and this calculator does not model it. For exit-load scenarios, run the maturity, then subtract the load percentage on the units sold within the load period.
How do I use this as a step-up SIP?
This page covers a fixed monthly SIP. A separate step-up SIP calculator in this hub handles an annual increase: it takes a starting SIP, an increase percentage and a term, and shows the arithmetic year by year.
What return should I assume for an equity SIP?
There is no correct number this page states for you. Historical rolling returns of diversified equity funds have been in a wide range, and past performance does not indicate future performance. The Scheme Information Document for each fund lists its benchmark and historical returns.
Does this calculator work without an internet connection?
The widget needs the page loaded, but once the page has loaded, the arithmetic runs in your browser. It does not call a server during computation. The formula and worked example on the page are also readable with JavaScript switched off.
Do I need to pay capital gains tax on a SIP every year?
Not automatically. Tax is triggered on redemption, not during accumulation. When you sell units, each tranche's holding period is counted from the date that specific tranche was bought, under the First-In-First-Out method. Equity-oriented units held up to 12 months are taxed as short-term, over 12 months as long-term under the current regime.
Courses that teach the subject behind the SIP calculator
Mutual Funds Beginners Module
A structured programme covering mutual-fund concepts from the foundation level: products, Gold ETFs, debt and liquid funds, taxation, and the role of AMCs, fund managers, distributors and SEBI.
₹1,400 + 18% GST
Mutual Fund Distributors NISM Series VA Certification
Twelve NISM chapters including legal structure, SID and KIM, NAV and Total Expense Ratio, fund distribution practices, taxation, investor services and scheme performance.
₹2,500 + 18% GST
Mutual Fund Advanced Module
The next step after the Beginners module: investments by mutual-fund schemes, valuation of investments, mutual-fund accounting, cut-off time rules, taxation and the SID, SAI, KIM and fact sheets.
₹1,400 + 18% GST
