In terms of classification of the fund, it is based more on the asset mix of the fund than whether you do a lump sum investment or a SIP. An SIP or a systematic investment plan is the method of investing a fixed amount in a mutual fund in a periodic manner. An SIP can be fortnightly, monthly, quarterly or yearly. Gains made from SIPs are taxed as per the type of mutual fund and the holding period. For the purpose of taxation, each individual SIP is treated as a fresh investment and gains on it are taxed separately. That means your traditional FIFO method will be employed in this case.

Suppose you begin an SIP of ?10,000 a month in an equity fund for 12 months. Each SIP is considered to be a fresh investment. At the end of 12 months, if you decide to redeem your entire accumulated corpus (investments plus gains), all your gains will not be tax-free. Only the gains earned on the first SIP would be tax-free because only that investment would have completed one year. The rest of the gains would be subject to short-term capital gains tax.

For capital gains purpose on SIPs, the First in First out (FIFO) method is used where the units acquired initially under the initial SIPs are assumed to be sold first followed by others in a chronological order.