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Home›India›STP Calculator

STP Calculator India — FY 2025-26

Calculate how your lumpsum grows via Systematic Transfer Plan from a liquid fund to equity, understand the post-2023 debt MF tax on each redemption, and compare STP vs lumpsum vs SIP. Updated with Finance Act 2023 debt taxation rules and FY 2025-26 rates.

Calculate how your lumpsum grows via STP from liquid fund to equity
₹
Total amount to invest via STP (e.g. ₹10,00,000)
months
Duration over which to transfer to equity (typically 6-12 months)
% p.a.
Expected annual return from liquid / overnight fund (~6-7%)
% p.a.
Expected annual return from destination equity fund (~12% for large-cap)
—

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How to Use This Calculator

STP Plan tab

Enter your lumpsum amount (e.g. ₹10,00,000 from a bonus or inheritance), the transfer period in months (typically 6–12 months), the liquid fund return (default 6.5% p.a.), and the equity expected return (default 12% p.a.). The calculator simulates month-by-month transfers, shows you liquid fund earnings during the STP period, the final equity value, and compares the outcome to simply investing the full lumpsum in equity on day 1.

STP Tax Impact tab

Enter the same lumpsum, transfer period, and liquid fund return — plus your income tax slab. Post-April 2023, each monthly redemption from a liquid/debt mutual fund triggers a taxable event at your slab rate (no LTCG benefit). The calculator shows total gains from the liquid fund, total tax across all monthly redemptions, and the effective post-tax yield — helping you assess whether the risk management benefit of STP is worth the tax drag.

STP vs SIP vs Lumpsum tab

Enter your starting amount, deployment period in months, and equity expected return. The calculator runs all three strategies side by side: (A) STP from a 6.5% liquid fund, (B) lumpsum on day 1 into equity, and (C) savings account + monthly SIP at 3.5% savings rate. Each shows total portfolio value, risk level, and tax impact so you can make an informed decision based on your specific situation.

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The Formula

STP is simulated month-by-month. Each month, the liquid fund balance grows, the monthly transfer is redeemed (triggering a taxable event), and the equity balance accumulates:

Liquid Fund Balance (each month):
Liquidn = Liquidn-1 × (1 + rliquid) − Monthly Transfer

Equity Balance (each month):
Equityn = Equityn-1 × (1 + requity) + Monthly Transfer

Where:
rliquid = Monthly liquid fund rate (annual rate / 12 / 100)
requity = Monthly equity fund rate (annual rate / 12 / 100)
Monthly Transfer = Lumpsum / Transfer Months

Monthly Transfer Amount:
Monthly Transfer = Total Lumpsum ÷ Number of STP Months

STP Tax per Redemption (post-Apr 2023):
Gainn = Redemption Value − Proportional Cost Basis
Taxn = Gainn × Slab Rate

Proportional Cost Basis = Original Cost × (Redemption Value / Current Liquid Balance)

Taxation rules (FY 2025-26):
Liquid / Debt MF (post Apr 2023): Gains taxed at income slab rate regardless of holding period. No indexation, no LTCG exemption.
Equity MF (destination fund): LTCG 12.5% on gains above ₹1,25,000/year when units are eventually redeemed after 1 year.

The key difference between STP and a savings account + SIP: the liquid fund earns ~6.5% p.a. versus ~3.5% in a savings account, making STP the more efficient holding vehicle for the uninvested portion of your lumpsum.

Example

Rohan — Software engineer in Bengaluru, received ₹15L annual bonus

Rohan (28) receives a ₹15,00,000 bonus in April 2025. Markets are near all-time highs and he is nervous about investing the full amount immediately. His advisor suggests a 12-month STP from a liquid fund into a Nifty 50 index fund. Rohan wants to understand the math: what will he get, how much tax will he pay, and should he just invest the lumpsum directly?

Step 1: STP Plan calculation

Lumpsum in liquid fund₹15,00,000
Transfer period12 months
Monthly transfer amount₹1,25,000
Liquid fund return6.5% p.a.
Equity expected return12% p.a.

Step 2: Results after 12 months

Liquid fund earnings during STP~₹52,000
Equity fund value at end of 12 months~₹15,97,500
Total portfolio value (STP)~₹15,97,500
Lumpsum day 1 value (12 months, 12%)~₹16,80,000
Lumpsum advantage in rising market~₹82,500

Step 3: Tax impact at 30% slab (FY 2025-26)

Total liquid fund gains over 12 months~₹52,000
Tax at 30% slab (debt MF rule)~₹15,600
Net earnings from liquid fund after tax~₹36,400
Tax drag as % of lumpsum~0.10%

Rohan's STP gives him ₹15.97L vs ₹16.8L for lumpsum in a rising market — a ₹82,500 opportunity cost. However, his tax drag is only ₹15,600 (0.1% of lumpsum). If markets had fallen 10–15% in those 12 months, STP would have protected him from a ₹1.5L loss on the full lumpsum. For a ₹15L bonus, Rohan decides the peace of mind is worth the trade-off.

FAQ

STP (Systematic Transfer Plan) and SIP (Systematic Investment Plan) both involve investing a fixed amount monthly into an equity fund — but they differ in the source of funds. In a SIP, fresh money comes from your bank account each month. In an STP, you first invest a lumpsum into a liquid or debt fund, and then the fund house automatically transfers a fixed amount from that liquid fund into an equity fund every month. STP is ideal when you have a large lumpsum (bonus, inheritance, property sale proceeds) but are uncomfortable investing it all in equity at once due to market timing risk. SIP is better suited for regular monthly income (salary-based investing).
This is the most important tax change affecting STP. Before April 2023, debt and liquid mutual fund gains held for 3+ years were taxed at 20% with indexation (LTCG), which was very tax-efficient. From 1 April 2023 (Finance Act 2023), all gains from debt and liquid mutual funds are now taxed at your income slab rate (up to 30%) regardless of how long you hold them — no LTCG benefit, no indexation. Each monthly STP redemption from the liquid/source fund is a separate taxable event. For a 30% slab investor with a ₹10L STP over 12 months at 6.5%, this means approximately ₹10,000–₹15,000 in total tax across 12 redemptions — small relative to the lumpsum, but a real cost to account for.
There are two main STP types: Fixed STP transfers a fixed rupee amount (e.g. ₹50,000/month) regardless of market conditions — simple and predictable. Capital STP transfers only the appreciation from the source fund, keeping the original capital intact — useful for conservative investors who want to preserve the principal in the liquid fund while moving only returns to equity. There is also Flexi STP (offered by some AMCs) which varies the transfer amount based on a pre-set valuation formula (transferring more to equity when markets are cheap, less when expensive). For most retail investors, Fixed STP is the most practical and widely available option.
Lumpsum beats STP approximately 65% of the time historically, because equity markets tend to rise over time. STP outperforms when equity markets fall or are highly volatile during the deployment window — it reduces the average cost per unit (similar to rupee cost averaging). STP makes most sense when: (1) you are deploying a large windfall (₹5L+) in a single shot; (2) markets are near all-time highs and you are worried about a near-term correction; (3) you are a conservative or first-time equity investor who wants a gradual entry; (4) you have a medium risk appetite and want to sleep well at night. If you are a seasoned investor with a long horizon (10+ years), lumpsum directly into a low-cost index fund is statistically superior.
Minimum STP amounts vary by AMC. As a general rule: HDFC, ICICI, Axis, SBI Mutual Fund require a minimum of ₹500–₹1,000 per STP instalment and typically require at least 6 instalments. The minimum investment in the source (liquid) fund is usually ₹5,000–₹10,000. Tenure: most AMCs allow STP from 1 month onwards, but practically 3–24 months is the common range. For lumpsum amounts above ₹5 lakh, 6–12 months is the most popular STP window. Above 24 months, the STP benefit diminishes because the opportunity cost of keeping money in a lower-return liquid fund for longer outweighs the risk reduction benefit.

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