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Short & Long-term Tax Implications

Shailesh wants to know about the tax implications on SIP investments & when he can sell his units

What are the tax implications for SIP investment? If I start the SIP on January 1, 2007, and continue it for a year, can I sell all the units at the end of the year (January 2008)?

You can sell the units when you want. But you will be taxed if you do not hold them for at least a year. The SIP is nothing but a regular investment at defined periodicity. Hence, each installment of your SIP investment in an equity fund will be liable for short-term capital gains tax if not held for a minimum period of 12 months. So the units bought in February will be exempt from tax only if you sell it 12 months after February. And so on and so forth. You have to hold the units one year from the date you bought them, not from the date you started the SIP.

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