Tax on SIP is calculated only at the time of redemption, and it depends upon the type of mutual fund and the duration for which they are held by the investor. If the SIP is for equity mutual funds, Short-Term Capital Gains (STCG) tax at a 15% rate is applicable if they are redeemed within 12 months. If the funds are held for more than 12 months and the gains exceed Rs. 1 lakh, Long-Term Capital Gains (LTCG) tax at a 10% rate without indexation is applicable.