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What are SIP Withdrawal Charges in Mutual Funds?

Mutual fund withdrawal charges or exit loads are levied by the fund house to discourage investors from redeeming their investments too quickly. Scripbox does not have any withdrawal charges. However, at the time of withdrawal, depending on whether your investments are classified as short-term or long-term, you may incur exit loads (to the mutual fund company) or capital gains taxes.

Exit Load Charges in Mutual Fund

Type of InvestmentExit Load
Equity *1% of the sale proceeds if sold within 1 year of purchase *.
Debt *Usually none.
Tax SavingNot applicable as the equity investments cannot be sold before the 3 year lock-in period, there by exceeding 1 year.
US EquityUsually none.
* Investment type: Equity

Fund Name: Parag Parikh Long Term Equity Fund (Growth)

Exit load: 2% on or before 365 days OR 1% after 365 days but on or before 730 days.

* Exit loads on Liquid Funds as are follows: 

Investor exit upon subscriptionExit loads as a % of redemption proceeds
Day 10.0070%
Day 20.0065%
Day 30.0060%
Day 40.0055%
Day 50.0050%
Day 60.0045%
Day 70.0000%

(This is applicable for all investments made in liquid funds post October 19, 2019)

SIP Withdrawal Charges with Example

For SIP withdrawals, some mutual funds may impose exit loads if the investment is redeemed before a specified period. For instance, if you withdraw your SIP investment within a year from the date of investment, the mutual fund may charge an exit load ranging from 0.5% to 2% of the redemption amount.

In the case of investment through SIP, every instalment is treated as a fresh purchase. For example, you are investing an amount of INR 1,000 through monthly SIP in a fund that charges an exit load of 1% for a holding period of less than 1 year. If you withdraw the investment towards the end of 2 years, then investments made in the first 12 months will not attract an exit load. Investments made after 12 months will attract the 1% exit load.

MonthInvestment AmountExit Load as on April 2023
Jan-21₹1,000No Exit Load
Feb-21₹1,000No Exit Load
Mar-21₹1,000No Exit Load
Apr-21₹1,000No Exit Load
May-21₹1,000No Exit Load
Jun-21₹1,000No Exit Load
Jul-21₹1,000No Exit Load
Aug-21₹1,000No Exit Load
Sep-21₹1,000No Exit Load
Oct-21₹1,000No Exit Load
Nov-21₹1,000No Exit Load
Dec-21₹1,000No Exit Load
Jan-22₹1,000No Exit Load
Feb-22₹1,000No Exit Load
Mar-22₹1,000No Exit Load

Recommended to Use Scripbox’s: SIP Calculator to find returns

Capital Gain Taxes

Type of InvestmentHolding Period to beclassified “Long Term”Tax on Long-TermCapital GainsTax on Short-TermCapital Gains
Equity1 year from purchase10% capital gains tax on gains over Rs.1 Lakh15% flat tax on the gain amount after exit load deduction + cess
Debt3 years from purchase20% tax after “indexation”: a process by which you can adjust your purchase cost upwards based on inflationTax based on your income tax bracket (10% or 20% or 30% + cess)
Tax Saving3 year lock-in for these equity funds to be eligible for section 80C income tax deduction10% capital gains tax on gains over Rs.1 LakhNot applicable as these investments cannot be sold before the 3 year lock-in period
US equity3 years from purchase20% tax after “indexation”: a process by which you can adjust your purchase cost upwards based on inflationTax based on your income tax bracket (10% or 20% or 30% + cess)

Frequently Asked Question

What do you mean by SIP withdrawal charges?

Systematic Investment Plan (SIP) withdrawal charges in mutual funds refer to any fees or costs associated with redeeming or withdrawing your investment from the mutual fund through the SIP. It’s important to note that SIP withdrawal charges are not common in all mutual funds and may vary depending on the AMC and the specific fund you have invested in, such as tax saver or elss etc. The charges, if applicable, are typically disclosed in the fund’s offer document or Key Information Memorandum (KIM).

What is exit load in mutual fund?

Some mutual funds impose an exit load on investors who redeem their units within a specified period after the purchase. The exit load is usually expressed as a percentage of the redemption amount or NAV. For example, if the exit load is 1% and you redeem Rs. 1,000 worth of units, you may incur a charge of Rs. 10. Read more about mutual fund exit load.

What is SIP Lock-in Period?

Tax saver and ELSS mutual funds have a minimum SIP tenure or lock-in period during which investors are not allowed to withdraw their investments without incurring charges. This lock-in period could vary from a few months to a few years, depending on the fund’s policies.