How to Withdraw SIP Amount: Process, Rules, Tax and Exit Load
You have been investing through an SIP for a while, but now you need some of that money back. Do you have to stop the SIP first? Can you withdraw only a part of it? And what happens to your future instalments?
Withdrawing money from an SIP actually means redeeming the mutual fund units purchased through your SIP.
This guide explains how to withdraw SIP amount, the withdrawal process, applicable charges and taxes, and the key rules to check before redeeming your investment.
Can I Withdraw SIP Anytime?
Yes, units purchased through an SIP in an open-ended mutual fund can generally be redeemed on any business day, unless they are subject to a lock-in or another scheme-specific restriction.
SIP Withdrawal Methods
You can withdraw your SIP investment in different ways depending on whether you need the entire investment, only a portion, or regular withdrawals. Remember, you are actually redeeming the mutual fund units accumulated through your SIP.
- Full Redemption: Redeem all eligible units in the mutual fund scheme at once.
- Partial Redemption: Withdraw a specific amount or number of eligible units while keeping the remaining units invested.
- Systematic Withdrawal Plan (SWP): Set up regular withdrawals by redeeming units periodically, such as monthly or quarterly, subject to the scheme’s available options.
Exit load, tax and lock-in conditions may apply to each method depending on the mutual fund scheme and the units being redeemed.
How to Withdraw Money From SIP
The SIP withdrawal process involves redeeming some or all of the mutual fund units you hold.
Here’s how to withdraw SIP investment online:
- Log in: Open the AMC website, RTA or an investment app/ platform through which your investment can be managed.
- Open your portfolio: Go to your mutual fund holdings.
- Choose the scheme: Select the mutual fund from which you want to redeem units.
- Select Redeem: Choose the redemption or withdrawal option.
- Enter the amount: Depending on the available options, enter the amount or number of units you want to redeem.
- Confirm the request: Review the details and complete the required authentication.
- Receive the proceeds: Once processed, the redemption amount is credited to the registered bank account.
Do You Need to Stop SIP Before Withdrawing?
No. Stopping an SIP and redeeming your mutual fund units are separate actions.
- If you redeem existing units but keep your SIP active, future scheduled installments can continue to be invested.
- If you stop the SIP but do not redeem, your existing mutual fund units remain invested.
Also explore: What is CAGR in a mutual fund?
What is the SIP Withdrawal Time?
The time taken to receive your SIP withdrawal depends on the type of mutual fund and the applicable redemption timeline. In most cases, the amount may reach your registered bank account within a few working days after a valid redemption request is processed.
| Fund Type | Typical Redemption Timeline |
| Liquid / Overnight Funds | Usually T+1 working day |
| Debt Funds | Usually T+1 to T+2 working days |
| Equity Funds | Usually T+2 to T+3 working days |
| International / Fund of Funds | May take longer, depending on the scheme |
Here, T refers to the applicable transaction day. The exact timeline can vary by scheme and applicable regulations.
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SIP Withdrawal Rules – Important Things to Keep in Mind
Before withdrawing your SIP investment, check the lock-in, SIP exit load, tax and redemption timeline. These can affect when you can withdraw and how much you finally receive.
- Exit Load: There is no standard exit load for all mutual funds.
For example, if a scheme has a 1% exit load and an applicable NAV of ₹10, the redemption price becomes ₹9.90 per unit. Always check the scheme’s current exit-load structure.
Read in detail about Exit Load in Mutual Funds.
- ELSS Lock-In: Each ELSS SIP instalment has a 3-year lock-in from its individual allotment date.
So, monthly SIP instalments become eligible for redemption at different times.
- Equity Fund Tax: For equity-oriented funds, gains on units held for up to 12 months are generally short-term and taxed at 20%, while qualifying long-term gains are taxed at 12.5%, with the applicable ₹1.25 lakh annual threshold under Section 112A.
- Stopping vs Withdrawing: Redeeming existing units does not automatically stop future SIP instalments.
If you want future investments to stop, the SIP instruction must be cancelled separately.
- Redemption Time: Under normal circumstances, mutual fund redemption proceeds are required to be dispatched within 3 working days, although exceptional circumstances can have different timelines.
When to Withdraw SIP
There is no single when to withdraw SIP rule that applies to every investor. A redemption decision may depend on factors such as the purpose of the investment, financial requirement, investment horizon and changes in circumstances.
Before redeeming, it can be useful to check:
- Whether the units are under a lock-in
- Whether an exit load applies
- Applicable capital gains tax
- How much you actually need to redeem
- Whether you also want to stop future SIP instalments
This helps distinguish the need to withdraw money from the decision to discontinue the SIP itself.
Conclusion
For most open-ended mutual funds, eligible units can generally be redeemed without waiting for your planned SIP tenure to finish. However, always check the scheme’s lock-in, exit load, taxation and redemption rules before submitting a request.
FAQs
You can withdraw money from mutual fund investments by placing a redemption request for eligible units through the AMC, RTA or investment platform.
Most open-ended mutual funds do not have a fixed maturity simply because you invest through SIP. Eligible units can generally be redeemed, subject to lock-in and scheme-specific conditions.
To redeem SIP investments, select the mutual fund scheme, choose the eligible amount or units you want to withdraw and submit a redemption request through the relevant platform.
First cancel the SIP if you want to stop future instalments, and separately place a redemption request for the existing eligible mutual fund units.
SIP premature withdrawal generally refers to redeeming units earlier than your planned investment period. Exit load, tax or lock-in restrictions may apply depending on the scheme.
Stopping the SIP prevents future scheduled investments, while withdrawing involves redeeming the units you already own. If you do both, future SIP instalments stop and the eligible units you choose to redeem are withdrawn.
There is no standard penalty simply for withdrawing an SIP investment. However, an exit load may apply if you redeem units within the period specified by the mutual fund scheme.
The SIP withdrawal time depends on the type of mutual fund and applicable redemption timeline. Once the redemption is processed, the proceeds are credited to the registered bank account.
Redemption can result in taxable capital gains. The tax treatment depends on factors such as the type of mutual fund, holding period and applicable tax rules; tax generally applies to the capital gain rather than the entire withdrawal amount.
Yes, eligible units in many open-ended mutual funds can be redeemed before one year. However, an exit load and short-term capital gains tax may apply depending on the scheme and fund category.
