The Growth option reinvests all profits back into the fund rather than distributing them — your wealth compounds inside the scheme, and you realise gains only on redemption.
In the Growth option, any dividends, interest income, or capital gains earned by the portfolio are not distributed to investors. Instead, they remain in the fund, increasing its NAV over time. You don't receive any periodic payouts; your wealth grows silently as the NAV rises. You pay tax only when you redeem, based on the type of fund and how long you've held it.
The Growth option is like a savings account where the bank reinvests every rupee of interest back into your account instead of paying it out. Your balance grows faster because you're earning returns on previous returns (compounding). You touch the money only when you decide to. For wealth creation over 5, 10, or 20 years, Growth option is almost always the better choice.
All net income and capital gains in the portfolio are reinvested into the scheme automatically.
The NAV of the Growth option rises continuously as returns compound inside the fund.
You have zero payout during the investment period — all gains are locked in the growing NAV.
On redemption, you pay STCG or LTCG tax on the difference between sale NAV and purchase NAV.
You invest ₹5,00,000 in a fund on the Growth option. Over 12 years at 12% CAGR, the NAV grows from ₹100 to ₹399. Your 5,000 units are now worth ₹19,96,000 — you pay LTCG tax (10% above ₹1 lakh gain) only at the time you sell. The same corpus in the IDCW option would have been smaller because each payout reduces the base that compounds.