Tax rules change; always confirm the current rates with a tax professional or the latest Finance Act before acting.
In broad terms (illustrative only): equity-oriented funds held for more than 12 months generally attract long-term capital gains tax above a basic exemption limit. Gains on units held for 12 months or less are treated as short-term and taxed at a different rate.
Debt-oriented funds follow different holding-period and tax treatment rules that have evolved in recent years.
The important practical points: (1) tax is paid only when you redeem or switch, (2) SIPs create multiple purchase dates so each tranche has its own holding period, and (3) tax efficiency is secondary to choosing the right fund for the goal and risk.